Management plans a $120 million IPO in which the offering price to the public will be $50 per share. The company will receive $47.50 per share. The firm’s legal fees, SEC registration fees, and other out-of-pocket costs will total $400,000. If the stock price increases 14 percent on the first day of trading, what will be the total cost of issuing the securities? Total cost $________

Management plans a $120 million IPO in which the offering price to the public will be $50 per share. The company will receive $47.50 per share. The firm’s legal fees, SEC registration fees, and other out-of-pocket costs will total $400,000. If the stock price increases 14 percent on the first day of trading, what will be the total cost of issuing the securities? Total cost $________

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Give typing answer with explanation and conclusion A share of common stock is paying $3.50 per share, but the corporation only pays 40% of its earnings as cash dividends. The anticipated growth of this stock is 8%. Find the value of this stock if an investor wants a yield of 10%. If the stock is selling for $45, what is the expected yield?
Caspian Water needs to raise $59.00 million by issuing additional shares of stock. If the market estimates Caspian Water will pay a dividend of $2.12 next year (D1 2.12), which will grow at 3.99% forever and the cost of equity to be 12.82%then how many shares of stock must the firm sell? 1 ) None of the answers in this list is within 100 shares of the correct answer 2) 312,890 3) 2,457,406 4 ) 4,128,970 5 ) 915,939 6 ) 2.975,934
Rebel Restaurant expects to pay a common stock dividend of $1.50 per share next year (d1). Dividends are expected to grow at a 3% rate for the foreseeable future. The restaurant’s common stock is selling for $18 per share and issuance costs are $3 per share. What is the restaurant's cost of external equity? 12.11% 14.00% 13.00% 20.59%
An all-equity firm has expected earnings of $14,200 and a market value of $82,271. The firm is planning to issue $15,000 of debt at 6.3 percent interest and use the proceeds to repurchase shares at their current market value. Ignore taxes. What will be the cost of equity after the repurchase?
7. Doctors' Inc. just paid an annual dividend of $2.00 last week and is currently selling for $25 per share (not necessarily the value). Its dividends are expected to increase by 5% annually. Based on the riskiness of Doctors' Inc's stock, your required rate of return is 15%. What should be your trading strategy on this stock? a. b. C. d. e. Buy the stock at $25.00 if you don't own it as it is worth $21.00 per share. Sell the stock if you own it at $25.00 as it is worth $21.00 per share. Buy the stock at $25.00 if you don't own it as it is worth $28.00 per share. Sell the stock if you own it at $25.00 as it is worth $13.50 per share. Nothing, the stock is fairly priced at $25.00 per share.
A company wants to raise $400 million in a new stock issue. Its investment banker indicates that the sale of new stock will require 5 percent underpricing and a 4 percent spread (Hint: the underpricing is 5 percent of the current stock price, and the spread is 4 percent of the issue price) a Assuming the company's stock price does not change from its current price of $65 per share, what would be the issue price to the public after underpricing? How many shares would the company need to sell? Note: Round intermediate calculations to 2 decimal places. Round your answers to 2 decimal places. Enter "Number of shares" answer in millions. 4 Issue price Number of shares million b. How much money will the investment banking syndicate earn on the sale? Note: Round intermediate calculations to 2 decimal places. Enter your answer in millions rounded to 2 decimal places. Investment bankers' revenue million i