You have purchased 1 million shares in a restaurant chain venture. At this zero-stage investment, your company's assets are $120,000 plus the idea for your new product. Suppose that when you first approach your friendly VC, he decides that your shares are worth only $0.50 each. How many shares will you need to sell to raise the additional $635,000? Note: Enter your answer in whole numbers, not in millions. What fraction of the firm will you own after the VC investment? Note: Enter your answer as a percent rounded to 1 decimal place.

You have purchased 1 million shares in a restaurant chain venture. At this zero-stage investment, your company's assets are $120,000 plus the idea for your new product. Suppose that when you first approach your friendly VC, he decides that your shares are worth only $0.50 each. How many shares will you need to sell to raise the additional $635,000? Note: Enter your answer in whole numbers, not in millions. What fraction of the firm will you own after the VC investment? Note: Enter your answer as a percent rounded to 1 decimal place.

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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Suppose you have just become the president of J&J and the first decision you face is whether Co go ahead with a plan to renovate the company's Al systems. The plan will cost the company $60 million, and it is expected to save $15 million per year after taxes over the next five years. The firm sources of funds and corresponding required rates of return are as follow: $5 million common stock at 16%, $800,000 preferred stock at 12%, $6 million debt at 7%. All amounts are listed at market values and the firm's tax rate is 30%. You are the financial manager and supposed to calculate the NPV. What's the NPV? Do you recommend taking the project? ง = O NPV $5.167 Millions; I'll recommend the owners to take the project. O NPV=-$1.720 Millions; I'll tell the owners not to take the project. NPV = $4.562 Millions; I'll tell the owners not to take the project. O NPV=-$8.098 Millions; I'll tell the owners not to take the project.
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A firm has 5 million shares outstanding with a market price of $35 per share. The firm has $10 million in extra cash (short-term investments) that it plans to use in a stock repurchase; the firm has no other financial investments or any debt. What is the firm's value of operations after the repurchase? Enter your answer in millions. For example, an answer of $1.23 million should be entered as 1.23, not 1,230,000. Round your answer to two decimal places. $ million How many shares will remain after the repurchase? Round your answer to the nearest whole number. shares

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