EBK CORPORATE FINANCE
4th Edition
ISBN: 8220103164535
Author: DeMarzo
Publisher: PEARSON
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Question
Chapter 23, Problem 20P
a.
Summary Introduction
To determine: When the rights issue is successful, how much money would be raised.
Introduction: Initial public offering (IPO) occurs when the company sells their share publically on the open market for the first time.
b.
Summary Introduction
To determine: The share price after the rights issue.
c.
Summary Introduction
To determine: The amount raised from the new plan.
d.
Summary Introduction
To determine: The share price after the rights issue.
e.
Summary Introduction
To find: The plan which is better for the firm shareholder and the plan which is more likely to raise the full amount of capital.
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Students have asked these similar questions
Marseille Manufacturing (MM) is considering raising money through a rights offering. MM currently has 10 million shares outstanding selling for €20 per share. Current shareholders will receive one right per share. Five rights are required to buy one share for €15. Will the rights be exercised? How much money will MM raise if all rights are exercised? What is the intrinsic value of a right (expected selling price for a single right)?
A firm wants to raise $40 million through a rights offering. The subscription price is set at $40. Currently, the company has 3 million shares outstanding with a current market price of $50 a share.
Each shareholder will receive one right for each share of stock they currently own. How many rights will be needed to purchase one new share of stock in this offering?
4
6.
Farah’s Fine Fashions (FFF) is considering raising money through a rights offering. FFF currently has 10 million shares outstanding selling for $22 per share. Current shareholders will receive one right per share. Five rights are required to buy one share for $20. Will the rights be exercised and if so, what is FFF’s new market value if all rights are exercised?
Select one:
a.
The rights will not be exercised.
b.
$220 million
c.
$260 million
d.
$321 million
e.
None of the above.
Chapter 23 Solutions
EBK CORPORATE FINANCE
Ch. 23.1 - Prob. 1CCCh. 23.1 - Prob. 2CCCh. 23.2 - Prob. 1CCCh. 23.2 - Prob. 2CCCh. 23.3 - List and discuss four characteristics about IPOs...Ch. 23.3 - Prob. 2CCCh. 23.4 - Prob. 1CCCh. 23.4 - What is the average stock price reaction to an...Ch. 23 - Prob. 1PCh. 23 - What are the advantages and the disadvantages to a...
Ch. 23 - Prob. 3PCh. 23 - Suppose venture capital firm GSB partners raised...Ch. 23 - Prob. 5PCh. 23 - Prob. 6PCh. 23 - Prob. 7PCh. 23 - Prob. 8PCh. 23 - Prob. 9PCh. 23 - Prob. 10PCh. 23 - Prob. 11PCh. 23 - Prob. 12PCh. 23 - What is IPO underpricing? If you decide to try to...Ch. 23 - Prob. 14PCh. 23 - Prob. 15PCh. 23 - Prob. 16PCh. 23 - Prob. 17PCh. 23 - Prob. 18PCh. 23 - Prob. 19PCh. 23 - Prob. 20P
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