QUESTION 7 "Consider the situation faced by the CFO of a company with a market capitalization of $700 Millions of USD, e.g. the firm has 100 million shares outstanding, so the shares are trading at $7 per share. The CFO needs to raise $500 Millions of USDs and announces a rights issue. Each existing shareholder is sent 5 right for every share he or she owns. The CFO has not decided how many rights will be required to purchase a share of new stock. At the current price per share, what is the maximum amount of rights the CFO can require stockholders for purchasing a share of new stock and so be able to raise the $500 Millions of USDs?"

QUESTION 7 "Consider the situation faced by the CFO of a company with a market capitalization of $700 Millions of USD, e.g. the firm has 100 million shares outstanding, so the shares are trading at $7 per share. The CFO needs to raise $500 Millions of USDs and announces a rights issue. Each existing shareholder is sent 5 right for every share he or she owns. The CFO has not decided how many rights will be required to purchase a share of new stock. At the current price per share, what is the maximum amount of rights the CFO can require stockholders for purchasing a share of new stock and so be able to raise the $500 Millions of USDs?"

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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Question 10 (2 points) A firm has 1 million shares outstanding. After-tax earnings have been constant at $5 per share. The firm retains 40% of earnings and pays out the rest in dividend. The shareholder's required rate of return is 15%. Calculate the current share price. $50 $20 $30 $10 $40
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9. The group company markets two shares for two different companies at a price of $50 per share, one of the two shares is undervalued by $5 and the other is overvalued by $1, but you have no way of knowing which of the two shares is overvalued and which of the two shares is undervalued the Actual. You plan to buy 2,000 shares of each issue. If the issue is priced below the actual price, it would make sense that only half of the required stock would be sold out. If you were able to buy 2,000 shares of each company what would your profit be? And what profit did you actually expect? What is the principle that you Explain it
please do question 14 d and question 9 a and b
Module 6 Question 6 (Stock dividend) Templeton Care Facilities, Inc. was contemplating a stock dividend. The firm's stock price had risen over the last three years and was trading at $150.00per share. The firm's board of directors felt that the trading range should be around $50 to $100, so they wanted to initiate a stock dividend that, other things remaining the same, would result in a $50 share price. What should the stock dividend be so as to result in the desired change in the firm's stock price? Part 1 The stock dividend shold be enter your response here%.
Question 9 options: Joffrey Corporation, a publicly traded company, is requiring an additional $5,000,000. The company has decided that a rights offering could raise the funds that are required. Currently there are 300,000 outstanding common shares and the market price of $55.00 per share. Each shareholder would receive 1 right for every share they own. The subscription price will be $50.00. This means that 100,000 new shares will be issued ($5,000,000/$50). Given this information, 300,000 old shares/100,000 new shares would mean 3 rights plus the subscription price will be required to get 1 new share. Sansa Stark is a shareholder and has 6,000 shares of Joffrey’s Corporation and $280,000 cash in her bank account. She is Queen of the North! What is the value of one right? Round to 2 decimal places. What is the value of Sansa’s portfolio before the rights issue? Round to the nearest dollar. If Sansa exercises her rights and participates in the rights…
Question 2 You have been appointed as a financial consultant by the directors of Baron Holdings. They require you to determine the cost of capital of the company. The following information is available on the capital structure of the company: ü 1 500 000 ordinary shares, with a market price of R3 per share. The latest dividend declared was 86 cents per share. A dividend growth of 15% was maintained for the past 5 years. ü 1 000 000 11%, R1 preference shares, with a market value of R3 per share. ü R1 000 000 9%, debentures due in 7 years and the current yield-to-maturity is 10%. Note that the current price of the debenture is R951 356 ü R700 000 14%, bank loan, due in December 2021. Additional information: - The company has a tax rate of 30%. - The beta of the company is 1.7, a risk free rate of 5% and the return on the market is 14%. Required: 2.1 Calculate the weighted average cost of capital. Use the Gordon Growth Model to calculate the cost of equity 2.2 Calculate the cost of…
please explain give me
Question 11 CloudData needs help pricing their IPO. There are 6 million shares to be offered, and informed investors can distinguish between 150 million high value firms (30% probability) and 50 million low value firms (70% probability). Informed investors request 2 million shares if high value. Uninformed investors always request 6 million shares because they cannot distinguish quality. What should be the Offering Price assuming allocation of shares proportional to petition (no book-building) and requiring for uninformed investors to break even? 12.39 O 20.31 10.32 15.87
You are the cfo of a company that has a market cap of 20B. The firm has 50 M shares outstanding, so the shares are trading at 400 per share. You need to raise 1B and have announced a rights issue. Each existing shareholder is sent one issuance right for every share they own. You need to decide how many rights you will require to purchase one share of new stock. You require 16 rights to purchase one share at a price of 320 per share, or 30 rights to purchase two shares at a price of 300 per share. How many shares will be issued with the first approach? How much money will be raised with the first approach? How many shares will be issued with the second approach? How much money will be raised with the second approach? What is the new stock price after issuing money with the second approach? What is the new stock price after issuing money with the first approach?

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