[LO4] Red Shoe Co. has concluded that 3. Rights additional equity financing will be needed to expand operations and that the needed funds will be best obtained through a rights offering. It has correctly determined that as a result of the rights offering, the share price will fall from $49 to $47.60 ($49 is the rights-on price; $47.60 is the ex- rights price, also known as the when-issued price). The company is seeking $16.5 million in additional funds with a per-share subscription price equal to $34. How many shares are there currently, before the offering? (Assume that the increment to the market value of the equity equals the gros proceeds from the offering.)

[LO4] Red Shoe Co. has concluded that 3. Rights additional equity financing will be needed to expand operations and that the needed funds will be best obtained through a rights offering. It has correctly determined that as a result of the rights offering, the share price will fall from $49 to $47.60 ($49 is the rights-on price; $47.60 is the ex- rights price, also known as the when-issued price). The company is seeking $16.5 million in additional funds with a per-share subscription price equal to $34. How many shares are there currently, before the offering? (Assume that the increment to the market value of the equity equals the gros proceeds from the offering.)

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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N3. assume capital markers are perfect snd the modigiliani-miller theorier hold. mercury electronics is currently an all equity financed company worth 185 million. they are planning to issue 74 million in debt. after issuing this debt, what will be the value of their equity?
V3. Which of the following statements about IPO is correct? O In a market without agency problem, Dutch auction is the worst among the three IPO methods in terms of finding out the best reservation price of the IPO shares • In a firm commitment cash offer, the underwriter would buy the whole issue from the issuer, and then sell the issue to the market. O Best efforts cash offer is the most popular IPO method in the US market. • In the best efforts cash offer, a firm would have to continue the issuance even if the demand does not meet their expectation.
Given the following data and assume the margin listed, what will your return on the investment be on this short sale (assume it is a margin transaction)? Shares Price Margin New Price O 50% 5500 O-33% O 75% O -50% $40 50% O None of these are correct $25
Fablab Mindanao purchased a water jet cutter in which their total manufacturing cost is expected to decrease due to an increased productivity as shown on the table below. 4 190 185 180 7 175 170 Year 2 200| 195 3 6 1 Cost, PhP 1000 165 a) Draw the Cash Flow Diagram b) Determine the equivalent annual cost at an interest rate of 8% per yeari
None
Brandtly Industries invests a large sum of money in R&D; as a result, it retains and reinvests all of its earnings. In other words, Brandtly does not pay any dividends, and it has no plans to pay dividends in the near future. A major pension fund is interested in purchasing Brandtly's stock. The pension fund manager has estimated Brandtly's free cash flows for the next 4 years as follows: $2 million, $7 million, $12 million, and $14 million. After the fourth year, free cash flow is projected to grow at a constant 5%. Brandtly's WACC is 13%, the market value of its debt and preferred stock totals $50 million, the firm has $15 million in nonoperating assets, and it has 12 million shares of common stock outstanding. a. What is the present value of the free cash flows projected during the next 4 years? Do not round intermediate calculations. Round your answer to the nearest dollar. Write out your answers completely. For example, 13 million should be entered as 13,000,000. $ 51339694.5
F1
Please solve d part only
An outside consultant has suggested that because debt is cheaper than equity, the firm should switch to a capital structure that is 50 percent debt and 50 percent equity. Under this new and more debt-oriented arrangement, the aftertax cost of debt is 9.00 percent, and the cost of common equity (in the form of retained earnings) is 17.00 percent. b. Recalculate the firm's weighted average cost of capital. (Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.) Debt Common equity Weighted average cost of capital Weighted Cost % 0.00 %
28) National paints SAOG is planning to issue new securities in the financial market to raise capital for its new project. Which of the following market can the company issue its shares? a. None b. Money Market c. Bond Market d. Secondary Market
Note:- • Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. • Answer completely. • You will get up vote for sure.
In considering Modigliani & Miller’s (M&M) Propositions I and II in a world with no taxes and no bankruptcy risk, assume Firm A is an all-equity firm with a required return on its assets (Ra) of 10%. Firm B is a levered firm and can borrow in the debt market at 7% (Rd). If M&M’s proposition II holds, what is the cost of equity and the WACC if Firm B is levered to 50% debt: is this capital structure better for Firm B? Show your calculations.

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