Homework Help is Here – Start Your Trial Now!
Business
Accounting
Young Corporation stock currently sells for $40 per share. There are 1 million shares currently outstanding. The company announces plans to raise $5 million by offering shares to the public at a price of $40 per share. a. If the underwriting spread is 6%, how many shares will the company need to issue in order to be left with net proceeds (before other administrative costs) of $5 million? Note: Do not round Intermediate calculations. Round your answer to the nearest whole number. Number of shares b. If the under writing spread is 6% and the other administrative costs are $55,000, what is the dollar value of the total direct costs of the issue? Note: Enter your answer in dollars not in millions. Do not round Intermediate calculations. Round your answer to the nearest whole dollar amount. Total direct costs c. If the share price falls by 5% at the announcement of the plans to proceed with a seasoned offering, what is the dollar cost of the announcement effect? Note: Enter your answer in dollars not in millions.

Young Corporation stock currently sells for $40 per share. There are 1 million shares currently outstanding. The company announces plans to raise $5 million by offering shares to the public at a price of $40 per share. a. If the underwriting spread is 6%, how many shares will the company need to issue in order to be left with net proceeds (before other administrative costs) of $5 million? Note: Do not round Intermediate calculations. Round your answer to the nearest whole number. Number of shares b. If the under writing spread is 6% and the other administrative costs are $55,000, what is the dollar value of the total direct costs of the issue? Note: Enter your answer in dollars not in millions. Do not round Intermediate calculations. Round your answer to the nearest whole dollar amount. Total direct costs c. If the share price falls by 5% at the announcement of the plans to proceed with a seasoned offering, what is the dollar cost of the announcement effect? Note: Enter your answer in dollars not in millions.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

Owe

Young Corporation stock currently sells for $40 per share. There are 1 million shares currently outstanding. The company announces plans to raise $5 million by offering shares to the public at a price of $40 per share. a. If the underwriting spread is 6%, how many shares will the company need to issue in order to be left with net proceeds (before other administrative costs) of $5 million? Note: Do not round Intermediate calculations. Round your answer to the nearest whole number. Number of shares b. If the under writing spread is 6% and the other administrative costs are $55,000, what is the dollar value of the total direct costs of the issue? Note: Enter your answer in dollars not in millions. Do not round intermediate calculations. Round your answer to the nearest whole dollar amount. Total direct costs c. If the share price falls by 5% at the announcement of the plans to proceed with a seasoned offering, what is the dollar cost of the announcement effect? Note: Enter your answer in dollars not in millions.
Transcribed Image Text:Young Corporation stock currently sells for $40 per share. There are 1 million shares currently outstanding. The company announces plans to raise $5 million by offering shares to the public at a price of $40 per share. a. If the underwriting spread is 6%, how many shares will the company need to issue in order to be left with net proceeds (before other administrative costs) of $5 million? Note: Do not round Intermediate calculations. Round your answer to the nearest whole number. Number of shares b. If the under writing spread is 6% and the other administrative costs are $55,000, what is the dollar value of the total direct costs of the issue? Note: Enter your answer in dollars not in millions. Do not round intermediate calculations. Round your answer to the nearest whole dollar amount. Total direct costs c. If the share price falls by 5% at the announcement of the plans to proceed with a seasoned offering, what is the dollar cost of the announcement effect? Note: Enter your answer in dollars not in millions.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 5 steps with 9 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
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