17th Edition

ISBN: 9781323419656

Author: Gitman

Publisher: PEARSON

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Chapter 7, Problem 7.1P

Authorized and available shares Aspin Corporation's charter authorizes issuance of 2,000,000 shares of common stock. Currently, 1,400,000 shares are outstanding, and 100,000 shares are being held as treasury stock. The firm wishes to raise $48,000,000 for a plant expansion. Discussions with its investment bankers indicate that the sale of new common stock will net the firm $60 per share.

a. What is the maximum number of new shares of common stock the firm can sell without receiving further authorization from shareholders?
b. Judging by the data given and your finding in part a, do you think the firm will be able to raise the needed funds without receiving further authorization?
c. What must the firm do to obtain authorization to issue more than the number of shares found in part a?

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Chapter 7 Solutions

Principles of Managerial Finance

Ch. 7.1 - What are the key differences between debt and...Ch. 7.2 - What risks do common stockholders take that other...Ch. 7.2 - Prob. 7.3RQ Ch. 7.2 - Explain the relationships among authorized shares,...Ch. 7.2 - Prob. 7.5RQ Ch. 7.2 - Prob. 7.6RQ Ch. 7.2 - Explain the cumulative feature of preferred stock....Ch. 7.2 - Prob. 7.8RQ Ch. 7.2 - Prob. 7.9RQ Ch. 7.2 - Prob. 7.10RQ

Ch. 7.2 - Prob. 7.11RQ Ch. 7.3 - Prob. 1FOE Ch. 7.3 - Describe the events that occur in an efficient...Ch. 7.3 - Prob. 7.13RQ Ch. 7.3 - Describe, compare, and contrast the following...Ch. 7.3 - Describe the free cash flow valuation model, and...Ch. 7.3 - Explain each of the three other approaches to...Ch. 7.4 - Prob. 7.17RQ Ch. 7.4 - Assuming that all other variables remain...Ch. 7 - Prob. 1OR Ch. 7 - Prob. 7.1STP Ch. 7 - Prob. 7.2STP Ch. 7 - Prob. 7.1WUE Ch. 7 - Prob. 7.2WUE Ch. 7 - Prob. 7.3WUE Ch. 7 - Prob. 7.4WUE Ch. 7 - Prob. 7.5WUE Ch. 7 - Prob. 7.6WUE Ch. 7 - Authorized and available shares Aspin...Ch. 7 - Prob. 7.2P Ch. 7 - Learning Goal 2 P7-3 Preferred dividends In each...Ch. 7 - Learning Goal 2 P7-4 Convertible preferred stock...Ch. 7 - Learning Goal 4 P7-5 Preferred stock valuation TXS...Ch. 7 - Prob. 7.6P Ch. 7 - Preferred stock valuation Jones Design wishes to...Ch. 7 - Learning Goal 4 P7-8 Common stock value: Constant...Ch. 7 - Common stock value: Constant growth McCracken...Ch. 7 - Prob. 7.10P Ch. 7 - Prob. 7.11P Ch. 7 - Prob. 7.12P Ch. 7 - Learning Goal 4 P7-14 Common stock value: Variable...Ch. 7 - Prob. 7.14P Ch. 7 - Prob. 7.15P Ch. 7 - Prob. 7.16P Ch. 7 - Prob. 7.17P Ch. 7 - Prob. 7.19P Ch. 7 - Prob. 7.20P Ch. 7 - Prob. 7.21P Ch. 7 - Prob. 7.22P Ch. 7 - Prob. 7.23P Ch. 7 - Prob. 7.24P

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Solution Summary: The author determines the maximum number of new shares of the common stock available to sell and the total shares needed to raise fund.

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