Suppose a company has a pre - IPO value of $41,000,000, has 2,000,000 existing shares, needs 9, 000, 000 in net proceeds, and the investment bank charges a 10% spread. What is the offering share price?
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- What is the answer a b c d ? General Accountinga) You are planning to takeover a company, Company X, and you have gathered the followingdata of the stock:Current period earnings: £5. ROE: 8%Beta: 1.5Risk free rate: 2%Market risk premium: 5% Plowback ratio: 70%Based on the above information,i. What is the current price of the stock?ii. What is the present value of growth opportunities?If ROE > rS, then a company will increase shareholder value (stock price will go up) when retaining earnings and reinvesting them within the company. Assume a firm has ROE = 20% and rS = 15% . Next period's earnings (E1) will be $8 per share. Calculate the share price if the firm retains 25% of its earnings (and pays out 75% as a dividend). Calculate the share price if the firm retains 50% of its earnings (and pays out 50% as a dividend). What is the difference in price? A.) $7.50 B.) $2 C.) $11.25 D.) $20 E.) $15
- What should be the price per share?Assume that a firm can issue preferred stock that has a $70 par value and pays a 15.0% annual dividend each year. The firm's investment bankers believe that investors will be willing to pay $84.00 per share and that flotation costs will be equal to $8.45 per share. Given this information, determine the difference between the investor's required rate of return, and the firm's cost of preferred stock. O 1.969%. O 1.398% O 1.683% O 2.541% O 2.224%Suppose a firm is operating in 2 periods. The shareholders are expecting to receive $100,000 economic profits (per share of stock) in period 1 and $120,000 (per share of stock) in period 2. Given the required rate of return is the same in both period, which 0.05 and the real option value is $50,000. What is the current value of a share of stock? (Report your answer with 2 decimal points)
- Assume that you are a consultant to Broske Inc., and you have been provided with the following data: D1 = $0.67 P0 = $27.50; g = 8.00% (constant). Float on new issues is 5% of market price. What is the cost of issuing common stock?Suppose that the last sale of Company X stock was at a price of $50. Further suppose that an investor wishes to place a market order to purchase 25,000 shares of Company X stock. What is the volume weighted average price that the investor will trade at in each of the market? What if the investor purchase 120,000 shares instead 25,000? Market Depth - Market A vs B Market AMarket B#SharesOffer ($)#SharesOffer ($)30,00050.0010,00050.0040,00050.0210,00050.0110,00050.0570,00050.0320,00050.0680,00050.0430,00050.0760,00050.0510,00050.0940,00050.05You have just purchased a share for $29.33. The company is expected to pay a dividend of $0.57 per share in exactly one year. If you want to earn a 10.7% return on your investment, what price do you need if you expect to sell the share immediately after it pays the dividend?
- ?? Financial accountingYou have started a company and are in luck-a venture capitalist has offered to invest. You own 100% of the company with 5.39 million shares. The VC offers $1.06 million for 850,000 new shares. a. What is the implied price per share? b. What is the post-money valuation? c. What fraction of the firm will you own after the investment? a. What is the implied price per share? The implied price per share will be $ per share. (Round to the nearest cent.) b. What is the post-money valuation? The post-money valuation will be $ c. What fraction of the firm will you Your fractional ownership will be million. (Round to two decimal places.) own after the investment? %. (Round to one decimal place.)Suppose a company whose shares are trading at $20 per share becomes a target of a tender offer and the suitor is prepared to pay $28 per share. You run a valuation and concludes that a fair valuation of the company would be $1 billion. If the company has 40 million shares outstanding, explain briefly the possible reason(s) for the suitor to offer that price?