On January 20, Metropolitan Inc., sold 10 million shares of stock in an SEO. The market price of Metropolitan at the time was$42.25 per share. Of the 10 million shares sold, 5 million shares were primary shares being sold by the company, and theremaining 5 million shares were being sold by the venture capital investors. Assume the underwriter charges 4.6% of thegross proceeds as an underwriting fee.a. How much money did Metropolitan raise?b. How much money did the venture capitalists receive?c. If the stock price dropped 2.5% on the announcement of the SEO and the new shares were sold at that price, how muchmoney would Metropolitan receive?a. How much money did Metropolitan raise?After underwriting fees, Metropolitan raised $million. (Round to two decimal places.)

A company raises money from the market by selling shares in the market and selling shares is a cost…

Answered: On January 20, Metropolitan Inc., sold…

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

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15. The income statement of Osborne Company reported net income of $500,000 for the year ended December 31 before considering the following: a. During the year, Osborne purchased trading securities b. At year end, the fair value of the investment portfolio was $35,000 less than the cost 4 c. The balance of Retained Earnings was $743,000 on January 1; d. Osborne paid $46,000 cash dividends during the year. Using the above data, calculate the balance of Retained Earnings on December 31.
Byrd Lumber has 2 million shares of stock outstanding. On the balance sheet the company has $34 million worth of common equity. The company's stock price is $17 a share. What is the company's Market Value Added (MVA)? If negative, use the negative sign instead of parentheses, e.g. -130,000. Your Answer
Margoles Publishing recently completed its IPO. The stock was offered at a price of $14.14 per share. On the first day of trading, the stock closed at $19.15 per share. If Margoles Publishing paid an underwriting spread of 7.3% for its IPO and sold 6 million shares, what was the total cost (exclusive of underpricing) to the company of going public? The total cost of going public was $ million. (Round to one decimal place.)
On January 20, Metropolitan Inc. sold 9 million shares of stock in an SEO. The market price of Metropolitan at the time was $41.25 per share. Of the 9 million shares sold, 4 million shares were primary shares being sold by the company, and the remaining 5 million shares were being sold by the venture capital investors. Assume the underwriter charges 5.3% of the gross proceeds as an underwriting fee. a. How much money did Metropolitan raise? b. How much money did the venture capitalists receive? c. If the stock price dropped 2.7% on the announcement of the SEO and the new shares were sold at that price, how much money would Metropolitan receive? a. How much money did Metropolitan raise? After underwriting fees, Metropolitan raised $ million. (Round to two decimal places.)
The balance sheet for Quinn Corporation is shown here in market value terms. There are 12,000 shares of stock outstanding. Cash Fixed assets Total Will Market Value Balance Sheet $ 49,300 355,000 Equity $ 404,300 Total In lieu of a dividend of $1.45, the company has announced it is going to repurchase $17,400 worth of stock. What effect will this transaction have on the equity of the firm? Note: Do not round intermediate calculations. Input the amount as positive value. New shares outstanding $ 404,300 $ 404,300 shareholders' equity by How many shares will be outstanding after the repurchase? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Share price What will the price per share be after the repurchase? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
Ehrlich Corporation earned $360,000 during a period when it had an average of 100,000 shares of common stock outstanding. The common stock sold at an average market price of $15 per share during the period. Also outstanding were 15,000 warrants that could be exercised to purchase one share of common stock for $10 for each warrant exercised.Instructions a. Are the warrants dilutive? b. Compute basic earnings per share. c. Compute diluted earnings per share.
The company raises $5 million in equity capital by selling new shares of stock in the company to equity investors. The par value of these shares is $100,000. For each element of the fundamental accounting equation (A, L, E), indicate whether that element increases, decreases, or ultimately remains unchanged.
You have been appointed as a financial consultant by the directors of Chennai Holdings. They require you to calculate the cost of capital of the company. The following information is available on the capital structure of the company: • 1 500 000 Ordinary shares, with a market price of R3 per share. The latest dividend declared was 90 cents per share. A dividend growth of 13% was maintained for the past 5 years. • 1 000 000 12%, R1 Preference shares with a market value of R2 per share. • R1 000 000 Debentures due in 7 years with a current market value of R 951 356 and • a before tax cost of 10% • R900 000 14% Bank loan, due in December 2016 Additional information: 1. The company has a tax rate of 30%. 2. The beta of the company is 1.7, a risk free rate of 7% and the return on the market is 15%. Required: 1.1 Calculate the weighted average cost of capital (WACC). Use the Gorden Growth • Model to calculate the cost of equity. (17) 1.2 Calculate the cost of equity, using the Capital Asset…
The Carlton Corporation has $4 million in earnings after taxes and 2 million shares outstanding. The stock trades at a P/E of 30. The firm has $1 million in excess cash. a. Compute the current price of the stock. (Do not round intermediate calculations and round your answer to 2 decimal places.) b. If the $1 million is used to pay dividends, how much will dividends per share be? (Do not round intermediate calculations and round your answer to 2 decimal places.)
Brown Corporation earns $600,000 and pays cash dividends of $200,000 during 2012. Dexter Corporation owns 3,000 of the 10,000 outstanding shares of Brown. What amount should Dexter show in the investment account at December 31, 2012 if the beginning of the year balance in the account was $800,000? $980,000. $800,000. $920,000. $1,200,000.
Xtel Inc. with a total market value of $630 million has $30 million in excess cash and no debt. Xtel has 1 million shares outstanding. Xtelʹs board is meeng to decide whether to pay out its $30 million in excess cash as a special dividend or to use it to repurchase shares of the firm’s stock. You own 1,000 shares of Xtel stock. Assume that Xtel uses the entire $30 million to repurchase shares at a current share price. How many shares will Xtel repurchase?

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