Need help please The Clifford Corporation has announced a rights offer to raise $10million for a new journal, the Journal of Financial Excess. Thisjournal will review potential articles after the author pays anonrefundable reviewing fee of $6,000 per page. The stockcurrently sells for $60 per share, and there are 1 million sharesoutstanding.a. What is the maximum possible subscription price? What is theminimum?b. If the subscription price is set at $50 per share, how many sharesmust be sold? How many rights will it take to buy one share?c. What is the ex-rights price? What is the value of a right?d. A shareholder with 2,000 shares before the offering has nodesire (or money) to buy additional shares offered as rights. Whatis his portfolio value before and after the rights offer?

Step 1: Maximum and Minimum Subscription PriceMaximum Price: The highest price at which the new…

Answered: The Clifford Corporation has announced…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter18: Initial Public Offerings, Investment Banking, And Capital Formation

Section: Chapter Questions

Problem 5P

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The Clifford Corporation has announced a rights offer to raise $20 million for a new journal, the Journal of Financial Excess. This journal will review potential articles after the author pays a nonrefundable reviewing fee of $5,000 per page. The stock currently sells for $72 per share, and there are 2.1 million shares outstanding. a. What is the maximum possible subscription price? What is the minimum? (Leave no cells blank - be certain to enter "0" wherever required.) b. If the subscription price is set at $64 per share, how many shares must be sold? How many rights will it take to buy one share? (Do not round intermediate calculations and round your rights needed answer to 2 decimal places, e.g., 32.16.) c. What is the ex-rights price? What is the value of a right? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) d. A shareholder with 2,000 shares before the offering has no desire (or money) to buy additional shares offered as rights.…
Hoobastink Mfg. is considering a rights offer. The company has determined that the ex- rights price will be $61. The current price is $68 per share, and there are 10 million shares outstanding. The rights offer would raise a total of $60 million. What is the subscription price?
Dilan, Inc. is a publicly-traded cyber security company and it is considering a rights offer. The ex-rights price is $36 on the ex-rights day, whereas the rights-on price was $45. The company has 4 million shares outstanding curretly and they plan to raise $16 million through the rights offering. Calculate the subscription price.
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You need to choose between making a public offering and arranging a private placement. In each case, the issue involves $10 million face value of 10-year debt. You have the following data for each: • A public issue. The interest rate on the debt would be 8.5%, and the debt would be issued at face value. The underwriting spread would be 1.5%, and other expenses would be $80,000. A private placement. The interest rate on the private placement would be 9% , but the total issuing expenses would be only $30,000 a-1. Calculate the net proceeds from public issue. Note: Enter your answer in dollars not millions of dollars. a-2. Calculate the net proceeds from private placement. Note: Enter your answer in dollars not millions of dollars. b-1. Calculate the Present Value of the extra interest on the private placement. Note: Do not round intermediate calculations. Enter your answer in dollars not millions of dollars. Round your answer to the nearest whole dollar amount. b-2. Other things being…
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