Financial Management: Theory & Practice
16th Edition
ISBN: 9780357296776
Author: Eugene F. Brigham, Michael C. Ehrhardt
Publisher: Cengage Learning US
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Chapter 18, Problem 2P
Summary Introduction
To calculate: Number of shares to be issued to raise $20 million after charging underwriting and flotation expenses.
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The Beranek Company, whose stock price is now $20, needs to raise $30 million in common stock. Underwriters have informed the firm's management that they must price the new issue to the public at $16 per share because of signaling effects. The underwriters' compensation will be 4% of the issue price, so Beranek will net $15.36 per share. The firm will also incur expenses in the amount of $190,000. How many shares must the firm sell to net $30 million after underwriting and flotation expenses? Do not round intermediate calculations. Write out your answer completely. For example, 5 million should be entered as 5,000,000. Round your answer to the nearest whole number.
The Beranek Company, whose stock price is now $25, needs to raise$20 million in common stock. Underwriters have informed the firm’s management that they must price the new issue to the public at $22 per sharebecause of signaling effects. The underwriters’ compensation will be 5% ofthe issue price, so Beranek will net $20.90 per share. The firm will also incurexpenses in the amount of $150,000. How many shares must the firm sell tonet $20 million after underwriting and flotation expenses?
The Taussig Company, whose stock price is currently $20.50, needs to raise$15 million by issuing common stock. Underwriters have informed Taussig’s managementthat it must price the new issue to the public at $20 per share to ensurethat all shares will be sold. The underwriters’ compensation will be 7 percent of theissue price, so Taussig will net $18.60 per share. The company will also incurexpenses in the amount of $252,000. How many shares must Taussig sell to net$15 million after underwriting and flotation expenses?
Chapter 18 Solutions
Financial Management: Theory & Practice
Ch. 18 - Prob. 1QCh. 18 - Prob. 2QCh. 18 - Prob. 3QCh. 18 - Prob. 4QCh. 18 - Prob. 5QCh. 18 - Prob. 1PCh. 18 - Prob. 2PCh. 18 - Prob. 3PCh. 18 - Bynum and Crumpton, a small jewelry manufacturer,...Ch. 18 - Prob. 5P
Ch. 18 - Prob. 6SPCh. 18 - Prob. 1MCCh. 18 - Prob. 2MCCh. 18 - Prob. 3MCCh. 18 - Prob. 4MCCh. 18 - Randy’s, a family-owned restaurant chain operating...Ch. 18 - Prob. 6MCCh. 18 - Prob. 7MCCh. 18 - Prob. 8MCCh. 18 - Prob. 9MCCh. 18 - Randy’s, a family-owned restaurant chain operating...Ch. 18 - Randys, a family-owned restaurant chain operating...Ch. 18 - Randy’s, a family-owned restaurant chain operating...Ch. 18 - Randy’s, a family-owned restaurant chain operating...Ch. 18 - Prob. 14MCCh. 18 - Prob. 15MCCh. 18 - Randys, a family-owned restaurant chain operating...Ch. 18 - Prob. 17MC
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