The firm you founded currently has 14 million shares, of which you own 8.68 million. You are considering an IPO where you would sell 2.1 million shares for $25. What is the maximum number of secondary shares you could sell and still retain more than 50% ownership of the firm? How much would the firm raise in that case? The maximum number of secondary shares you could sell is shares. (Round to the nearest whole number.) (Round to the nearest dollar.) The amount that the firm would raise is $

The firm you founded currently has 14 million shares, of which you own 8.68 million. You are considering an IPO where you would sell 2.1 million shares for $25. What is the maximum number of secondary shares you could sell and still retain more than 50% ownership of the firm? How much would the firm raise in that case? The maximum number of secondary shares you could sell is shares. (Round to the nearest whole number.) (Round to the nearest dollar.) The amount that the firm would raise is $

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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You founded a firm that currently has 10 million shares, of which you own 7 million. You are considering an IPO where you would sell 3 million shares for $22 each. If all of the shares sold are secondary, what is the maximum number of secondary shares you could sell and still retain more than 50% ownership of the firm? How much would the firm raise in that case? C What is the maximum number of secondary shares you could sell and still retain more than 50% ownership of the firm? shares. The maximum number of secondary shares you could sell is (Round to the nearest whole number.) How much would the firm raise in that case?
Zang Industries has hired the investment banking firm of Eric, Schwartz, & Mann (ESM) to help it go public. Zang and ESM agree that Zang's current value of equity is $55 million. Zang currently has 3 million shares outstanding and will issue 2 million new shares. ESM charges a 5% spread. How much cash will Zang raise net of the spread Write out your answer completely.
1. Pielago wants to purchase P400 par value, 20,000 preference shares from Placido Inc and plans to hold the shares long-term. The preference share has a constant dividend of P50 per share. Pielago requires a 20% return on all of her investment. What is the value of each preference share using the zero-growth model? 2. What is the importance of knowing the value of the preference share using the zero-growth model?
Your firm is selling 6 million shares in an IPO. You are targeting an offer price of $19.13 per share. Your underwriters have proposed a spread of 6.9%, but you would like to lower it to 5.4%. However, you are concerned that if you do so, they will argue for a lower offer price. Given the potential savings from a lower spread, how much lower can the offer price go before you would have preferred to pay 6.9% to get $19.13 per share? The offer price would need to drop to $. (Round to the nearest cent.)
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Let us suppose, a company has 1 million outstanding shares of stock, each valued at 25$. Let us also suppose that the replacement cost of its physical capital stock is 18 million $. a. Should this firm invest in more physical capital?b. Would your answer in part (a) change, if the replacement cost of its physical capital stock changes to 28 million $?
Suppose that the newspaper publishing company described above expected net earnings is $85 million and the firm is going public and will issue 15 million shares of stock. What is the price of the IPO using the P/E ratio if the forward P/E of comparable newspapers is 15x?
2) You bought 1500 shares of Microsoft one year ago for $120 per share. Microsoft paid a $2 (per-share) dividend last year. The current stock price is $105. a. What rate of return did you earn from your Microsoft investment? b. Ifinflation rate over the last year was 4%, what is your real rate of return? c. Rather than buying 1500 Microsoft shares a year ago, you instead sold them short. What is the rate of return from your Microsoft trade now? Focu MacBook Pro A
Zang Industries has hired the investment banking firm of Eric, Schwartz, & Mann (ESM) to help it go public. Zang and ESM agree that Zang’s current value of equity is $60 million. Zang currently has 4 million shares outstanding and will issue 1 million new shares. ESM charges a 7% spread. What is the correctly valued offer price, rounded to the nearest penny? How much cash will Zang raise net of the spread (use the rounded offer price)?
You work for a leveraged buyout firm and are evaluating a potential buyout of UnderWater Company. UnderWater's stock price is $19 and it has 2.00 million shares outstanding. You believe that if you buy the company and replace its management, its value will increase by 39%. You are planning on doing a leveraged buyout of UnderWater and will offer $23.75 per share for control of the company. a. Assuming you get 50% control, what will happen to the price of non-tendered shares? b. Given the answer in part (a), will shareholders tender their shares, not tender their shares, or be indifferent? c. What will your gain from the transaction be? a. Assuming you get 50% control, what will happen to the price of non-tendered shares? Share price will be $. (Round to the nearest cent.) Incorrec
We are trying to value the technology company B&B's share price. If the appropriate industry PE for this type of company is 5 and you predict net income for B&B to be $3 million for the coming year. Assuming the firm has 1 million shares of common stock. What is the forecasted stock price for a year from now? $3 $10 $8 $15
Your sister-in-law, a stockbroker at Invest Inc., is trying to sell you a stock with a current market price of $26. The stock's last dividend (Do) was $2.00, and earnings and dividends are expected to increase at a constant growth rate of 10 percent. Your required return on this stock is 20 percent. From a strict valuation standpoint, you should: a. Buy the stock; it is fairly valued. b. Buy the stock; it is undervalued by $3.00. c. Buy the stock; it is undervalued by $2.00. d. Not buy the stock; it is overvalued by $4.00. e. Not buy the stock; it is overvalued by $3.00.

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