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? 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?

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? 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?

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

See similar textbooks

Similar questions

You have purchased 1 million shares in a restaurant chain venture. At this zero-stage investment, your company's assets are $100,000 plus the idea for your new product. Suppose that when you first approach your friendly VC, he decides that your shares are worth only $0.40 each. How many shares will you need to sell to raise the additional $500,000? Note: Enter your answer in whole numbers, not in millions. What fraction of the firm will you own
Your company has earnings per share of $3. It has 1 million shares outstanding, each of which has a price of $38. You are thinking of buying TargetCo, which has earnings of $3 per share, 1 million shares outstanding, and a price per share of $25. You will pay for TargetCo by issuing new shares. There are no expected synergies from the transaction. Suppose you offered an exchange ratio such that, at current pre-announcement share prices for both firms, the offer represents a 15% premium to buy TargetCo. However, the actual premium that your company will pay for TargetCo when it completes the transaction will not be 15%, because on the announcement the target price will go up and your price will go down to reflect the fact that you are willing to pay a premium for TargetCo without any synergies. Assume that the takeover will occur with certainty and all market participants know this on the announcement of the takeover (ignore time value of money). a. What is the price per share of the…
You are negotiating with your underwriters in a firm commitment offering of 10 million primary shares. You have two options: set the IPO price at $25.00 per share with a spread of 8%, or set the price at $24.20 per share with a spread of 6%. Which option raises more money for your firm?
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
Suppose there is a firm with 250,000 shares outstanding that is trying to decide whether to pay a $12 cash dividend or do a 2-for-1 stock split. The date of the stock split and the ex-dividend date would be the same. Suppose that the stock price of the company on the day before the ex-dividend/split date is $30. If the shareholders of this firm only want the option that leads to the highest stock price afterward (regardless of the total value of their portfolios), which option would they prefer (holding all else constant)? Question 1 options: a) They would prefer the cash dividend because the stock price immediately after would be $3 higher than under the stock split. b) They would prefer the stock split because the stock price immediately after would be $3 higher than under the cash dividend. c) They would prefer the cash dividend because the stock price immediately after would be $12 higher than under the…
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…
Suppose you are an enterprising and creative entrepreneur who is considering a takeover of Itronic Listening Co. (ILC). You believe that under your management Itronic could sustain a dividend growth rate of 6% into the foreseeable future (they just paid a dividend of $2). But the takeover and subsequent changes to ILC's business will add more risk, so you will require a 14% return on your investment. What is the maximum price you should be willing to pay for the ILC stock? $23.50 $25.00 $26.50 $28.50 $29.50
Starware Software was founded last year to develop software for gaming applications. The founder initially invested $800,000 and received 12 million shares of stock. Starware now needs to raise a second round of capital, and it has identified a venture capitalist who is interested in investing. This venture capitalist will invest $1.00 million and wants to own 13% of the company after the investment is completed. a. How many shares must the venture capitalist receive to end up with 13% of the company? What is the implied price per share of this funding round? b. What will the value of the whole firm be after this investment (the post-money valuation)?
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
Was hoping for clarification about a stock capital concept, assume the following information: A potential investor is interested in buying all the common shares of a private company (ASPE), and becoming the owner. One of the due diligence discovered is: Currently, the company owns both preferred and common shares. There are 500 preferred shares with a cost and redemption value of $10 and $12 per share, respectively, and a 6% mandatory, cumulative dividend yield. These shares will be retained by the current owners of the company. Furthermore, the capital stock currently stated on the financial statements are $55,000 I was wondering, given this information, are there any accounting entries or changes to the SFP that need to be made? From what I know, there should be a dividend payable for the preferred shares. Is there anything else I am missing? Should there be any changes made to the capital stock account? Will this effect the purchase price of company (purchase price is based on net…
Assume perfect markets. TMX Corporation has 4 million shares outstanding and a share price of $50 per share. TMX wants to repurchase 1 million shares. What would be the share price immediately after they repurchase the shares? $37.50 $50.00 $66.67
Roundtree Software is going public using an auction IPO. The firm has received the following bids: Number of Shares 120,000 200,000 560,000 1,200,000 1,240,000 800,000 400,000 Price $14.60 14.40 14.20 14.00 13.80 13.60 13.40 Assuming Roundtree would like to sell 2.08 million shares in its IPO, what will the winning auction offer price be? The price will be $ per share. (Round to two decimal places.)

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS