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As the Covid-19 pandemic thrusts the travel industry into an unprecedented crisis, Singapore Airlines (SIA) unveiled plans to raise up to $5.31 billion through a 3-for-2 rights issue of 1.77 billion new shares. The issue price of each rights represents a discount of about 53.85% to the last transacted price on the last trading day prior to the announcement.
(a) Compute the issue price of each rights.
(b) What is the last transacted price prior to the announcement (round to the nearest cent)?
(c) What is the outstanding number of shares of the company prior to the announcement?
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- A US corporation has a UK subsidiary that is expected to generate the earnings of GBP2,000,000 at the end of operating quarter, March 31. The U.S. firm wishes to repatriate the GBP, perhaps to pay domestic shareholders a quarterly dividend. Let current spot rate be USD1.5385 = 1 GBP. The U.S. firm would like to hedge against unexpected depreciation in GBP, since such depreciation will results in fewer USD repatriation. The firm can do so by shorting the GBP forward contract by repatriating in April. Since GBP will be repatriated in April, the US Corporation used April GBP forward contract at USD1.5425 = 1 GBP. On maturity date the spot rate between USD and GBP is USD1.5175 = 1 GBP. Identify the position and determine gain or loss to US Corporation. Gain of USD 50,000 Loss of USD 50,000 Gain of GBP 50,000 Loss of GBP 50,0001. A student remarks: "135,000,000 shares of General Electric were sold yes- terday on the New York Stock Exchange, at an average price of $25 per share. That means General Electric just received over $3.4 billion from investors.” Briefly explain whether you agree with the student's analysis.BHP Billiton, the leading Australian iron ore mining giant, is listed on New York Stock Exchange. The iron ore prices have almost doubled from $67.87 on 3 August 2018 to $123.16 on 3 July 2019. The following table shows BHP stock prices in $ and the annualised historical volatility (Vol.) of BHP, VIX Index, the iron ore prices in $ at given dates. For simplicity, we assume one price, i.e., no bid-ask spread. Date 3 Jul 2019 BHP stock price Vol. (%) VIX Iron ore price 58.93 19.5 12.6 123.16 3 Jun 2019 52.38 18.9 18.9 93.97 3 May 2019 52.81 17.1 12.9 89.15 3 Apr 2019 56.30 19.3 13.7 87.60 4 Mar 2019 52.79 16.4 14.6 78.98 4 Feb 2019 51.12 35.3 15.7 77.85 3 Jan 2019 46.39 33.9 16.4 74.30 3 Dec 2018 46.50 36.3 20.0 67.82 5 Nov 2018 48.40 32.4 14.2 74.17 4 Oct 2018 50.01 23.2 13.2 70.79 4 Sep 2018 47.24 27.6 11.6 68.28 3 Aug 2018 50.38 31.2 16.1 67.87 A European call option on BHP stock that expired on 3 Jan 2020 and had a strike price of $65 was traded at $1.46 on 3 July 2019. A European…
- • X Enterprises has an investment in 25,000 shares of Y Electronics that X accounts for as a security available for sale. Y shares are publicly traded on the New York Stock Exchange, and the Wall Street Journal quotes a price for those shares of $10/share, but X believes the market has not appreciated the full value of the Y shares and that a more accurate price is $12/share. X should carry the Y investment on its balance sheet at: O $300,000. $250,000. O either $250,000 or $300,000, as either are defensible valuations. O $275,000, the midpoint of X's range of reasonably likely valuations of Y.Assume Merck is announcing that it is currently in the approval phase of a Covid19 medication. A part from Merck, there is still a number of other firms competing for anapproval. If Merck is successful in being the first one getting the approval, its future freecashflow is expected to increase by EUR 800 million over the next 3 years. Pfizer has currently9 million shares outstanding at a share price of EUR 32, EUR 50 million debts and acost of capital of 7%. What do you think will happen if the market learns that Pfizer was thefirst one getting the approval for the vaccination?Use the following questions to answer Q5 to 07. Hamstrung Electronics Inc. (HEI) has 6 billion shares outstanding and a share price of $15. HEI is considering developing a new product in house at a cost of $500 million. Alternatively, HEI can acquire a firm that already has the technology for $450 million worth (at the current price) of HEI's stock. Suppose that absent the expense of the new technology, HEI will have EPS of 5 0.78. 5. Suppose HEI develops the product in house. What impact would the development cost have on HEI's EPS? Assume all costs are incurred this year and are treated as an R&D expense, HEI's tax rate is 25% and the number of shares outstanding is unchanged. A. EPS will increase by $0.06. B EPS will decrease by $0.06. C. EPS will increase by $0.16. D. EPS will decrease by $0.16. 6. Suppose HEI does not develop the product in house but instead acquires the technology. What effect would the acquisition have on HET's EPS this year? (Note that acquisition expenses…
- Liam Wallace is general manager of Worldwide Salons. During 2018Wallace worked for the company all 18, 1 year at a $ 12,900 monthly salary. He also earned a year-end bonus equal to 15% of his annual salary Wallace's federal income tax withheld during 2018 was $1,161 per month, plus $2,322 on his bonus check. State income tax withheld came to $170 per month , plus $110 on the bonus . FICA tax was withheld on the annual earnings . Wallace authorized the following payroll deductions : Charity Fund contribution of 4% of total earnings and life insurance of $35 per month Worldwide incurred payroll tax expense on Wallace for FICA tax . The company also paid state unemployment tax and federal unemployment tax . Requirement 3. Make the journal entry to record Worldwide's expense for Wallace's total earnings for the year, his payroll deductions and net payDebit Salaries Expense and Bonus Expense as appropriate Credit liability accounts for the payroll deductions and Cash for net pay. An…Marseille Manufacturing (MM) stock is currently trading €42 per share, there are 12 million shares outstanding and I own 10% (1.2 million shares). MM is planning a SEO to raise an additional €100 million (proceeds to the firm). MM expects the stock price to drop 4% upon announcing the SEO. Assuming that 10% of the shares sold in the SEO are secondary shares, how many shares should MM plan to sell in order to receive €100 million? Assuming that I did not buy or sell any shares in the SEO, what percentage of MM will I own after the SEO?Carla Vista Inc. is considering two alternatives to finance its construction of a new $1.40 million plant. (a) Issuance of 140,000 shares of common stock at the market price of $10 per share. (b) Issuance of $1,400,000, 7% bonds at face value. Complete the following table. (Round earnings per share to 2 decimal places, e.g. 0.25.) Income before interest and taxes Interest expense from bonds Income before income taxes Income tax expense (40%) Net income Outstanding shares Earnings per share $ Indicate which alternative is preferable. Issue Stock $600,000 Net income is because of the additional shares of stock that are outstanding. $ V if stock is used. However, earnings per share is Issue Bond $600,000 460,000 V than earnings per share if bonds are used
- please answer the question as in attached file asap. thanksYou are trying to evaluate whether Adam plc, a UK based firm, has excess debt capacity. In 2019, Adam plc had 12.2 million shares outstanding at 21,000p per share and debt outstanding at £3 billion (book as well as market value). The debt has a rating of B and carries a cost of debt of 10.12%. In addition, the firm had leases outstanding, with annual lease payments anticipated to be £150million. The beta of the stock is 1.26. The risk-free rate is 6.12%. The market risk premium is 5.5%. (a) Estimate the current debt ratio for Adam plc. (b) Estimate the current cost of capital. (c) Estimate the current weighted average cost of capital (WACC). (d) Based on the 2019 operating income, the optimal debt to total capital ratio is computed to be 30%, at which point the rating will be BBB, and the new cost of debt is 8.12%. Estimate the WACC. *Below are the solutions to the above questions, but I am unsure on part c and d, as to how they found those numbers for the WACC- any…McDonald's Corp purchased the following portfolio of trading securities during 2014 and reported the following balances at December 31, 2014. No sales occurred during 2014. All declines are considered to be temporary. Security Cost FMV @ 12/31/2014 X $80,000 $82,000 Y 140,000 132,000 Z 32,000 28,000 The carrying value of the portfolio at 12/31/2014, on McDonald's balance sheet would be:
