Winston Sporting Goods is considering apublic offering of common stock. Itsinvestment banker has informed thecompany that the retail price will be $18.40per share for 670,000 shares. The companywill receive $16.75 per share and will incur$225,000 in registration, accounting, andprinting fees.1. What is the spread on this issue inpercentage terms?2. What are the total expenses of the issueas a percentage of the total value (atretail)?

### 1. Spread on the IssueThe spread is the difference between the retail price per share and the…

Answered: Winston Sporting Goods is considering a…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

You notice that Cornish Sodas has a share price of $41.97 and EPS of $1.81. Its competitor Putney Soda has EPS of $3.81. Jericho, a much smaller batch craft soda producer, has a P/E ratio of 33. Based on this information, what is one estimate of the value of a share of Putney Soda stock? One share of Putney Soda stock is valued at $ (Round to the nearest cent.)
Gamma Industries has net income of $1,100,000, and it has 1,355,000 shares of common stock outstanding. The company's stock currently trades at $35 a share. Gamma is considering a plan in which it will use available cash to repurchase 30% of its shares in the open market at the current $35 stock price. The repurchase is expected to have no effect on net income or the company's P/E ratio. What will be its stock price following the stock repurchase? Do not round intermediate calculations. Round your answer to the nearest cent.
Sona International has assets of $250 million, liabilities of $200 million and preference shares valued at $20 million. There are 1,500,000 ordinary shares in Sona International. The market price of the shares is $30. Jena is interested in knowing the (i) Book value, (ii) Book value per share, and (iii) Price to book value ratio of Sona International. Discuss the benefits and limitations of fundamental analysis.
Tiger Golf Supplies has $21 million in earnings with 6 million shares outstanding. Its investment banker thinks the stock should trade at a P/E ratio of 27. Assume there is an underwriting spread of 7.8 percent. What should the price to the public be? (Do not round intermediate calculations and round your answer to 2 decimal places.)
Jimmy Shoes Inc. has 10,000 shares outstanding with a stock price of $40 per share. The current weighted average cost of capital is 7%. It also carries long-term debt of $200,000 at an interest rate of 7% p.a. One of the agenda items in its AGM is to switch to a D/E of 1. Based on this information, answer the following question: What is the level of EBIT at which shareholders will be indifferent between the two capital structures, the one with a D/E = 0.5/1 and the other with a D/E of 1?
David's Watersports Firm is considering a public offering of common stock. Its investment banker has informed the company that the retail price will be $16.85 per share for 550,000 shares. The company will receive $15.40 per share and will incur $180,000 in registration, accounting, and printing fees. A. What is the spread on this issue in percentage terms? What are the total expenses of the issue as a percentage of total value (at retail)? B. If the firm wanted to net $15.99 million from this issue, how many shares must be sold?
Please give me answer
You have estimated that the present value of all future free cash flows of Venice Surf Co. to be $339 million. The company has nonoperating assets of $62 million and nonoperating liabilities of $271 million, and there are 8 million shares of common stock outstanding. Estimate the value of each share using the free cash flow valuation data provided. Present your answer to two decimal places, e.g., $23.45.
Phelps Labs has assets of $418,000, current liabilities of $126,000, and long-term liabilities of $131,000. There is $38,700 in preferred stock outstanding; 20,000 shares of common stock have been issued. Earnings available to common shareholders are $32,300. If the firm sells at two times book value per share, what will the P/E ratio be? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) P/E ratio times
A company has 20,858,702 shares outstanding. In an IPO, the firm issued 3,000,000 new shares. The initial price was ¢18.00 per share with investment bankers retaining ¢1.26 as fees. The final first-day closing price was ¢23.50 i. What were the total proceeds from this offering? What part was retained by the firm? What part by the investment bankers? What percent of the offering is this? ii. What was the market value of the firm following its first day as a publicly-held company?
Suppose a Sam's company in CA, completes an $95 million IPO priced to the public at $50 per share. The firm receives $47 per share, and the out-of-pocket expenses are $480,000. The stock’s closing price at the end of the first day is $59. What is the total cost to the firm of issuing the securities? $_______
You have been assigned to value the stock of XYZ a small illiquid company. Their recent income statement shows that earnings were $30,589,307 and they have 9,719,532 shares outstanding. You have found a very similar firm with publicly traded stock, ABC, which recently reported EPS of $2.358 and its stock is currently selling for $39.31. Use the P/E ratio of ABC to establish a reasonable price for the target firm XYZ. O $50.16 O $52.47 O $57.02 O $39.31 $5.30

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS