Underwriting Spread, EPS after & before issues

See attachment

Problem 15-14 - Refer to problems at the end of the chapter for details and instructions:
Use the template to complete the problem :

Winston Sporting Goods Solution:
Retail Price per Share $18 a) Spread ($) =
# of shares 600,000 Spread (%) =
Company Proceeds $16.50 Total Value =
Registration Fees $150,000
Amount Needed (b) $18,000,000 Out-of-pocket / Total Value =

Spread (%) =
Out-of-pocket =
Total (%) =

b) Amount needed =

Required Shares to Sell =

Winston Sporting Goods is considering a public offering of common stock. Its
investment banker has informed the company that the retail price will be $18
per share for 600,000 shares. The company will receive $16.50 per share and
will incur $150,000 in registration, accounting, and printing fees.
a. What is the spread on this issue in percentage terms? What are the total
expenses of the issue as a percentage of total value (at retail)?
b. If the firm wanted to net $18 million from this issue, how many shares must
be sold?

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Problem 15-10 - Refer to problems at the end of the chapter for details and instructions:
Use the template to complete the problem :

The Wrigley Corporation
Offer Size of Offer Public Price Net to Corp.
a 2.00 $16 $15.00
b 0.3 $1,001 $992.00

Solution:
a) Spread =
% underwriting spread =

b) Spread =
% underwriting spread =

c)

The Wrigley Corporation needs to raise $30 million. The investment banking
firm of Tinkers, Evers, & Chance will handle the transaction.
a. If stock is utilized, 2,000,000 shares will be sold to the public at $15.70 per
share. The corporation will receive a net price of $15 per share. What is the
percentage underwriting spread per share?
b. If bonds are utilized, slightly over 30,000 bonds will be sold to the public at
$1,001 per bond. The corporation will receive a net price of $992 per bond.
What is the percentage of underwriting spread per bond? (Relate the dollar
spread to the public price.)
c. Which alternative has the larger percentage of spread? Is this the normal
relationship between the two types of issues?

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Problem 15-5 - Refer to problems at the end of the chapter for details and instructions:
Use the template to complete the problem :

Jordan Broadcasting Company Solution:
Shares Outstanding 8,000,000 a) Earnings per share before stock issue =
Earnings $24,000,000
New Stock Issue 3,000,000 Earnings per share after stock issue =
Price of new shares $40
P/E 23 b) Earnings per Share =
P/E =
Stock Price =

c)

Jordan Broadcasting Company is going public at $40 net per share to the
company. There also are founding stockholders that are selling part of their
shares at the same price. Prior to the offering, the firm had $24 million in
earnings divided over eight million shares. The public offering will be for five
million shares; three million will be new corporate shares and two million will
be shares currently owned by the founding stockholders.
a. What is the immediate dilution based on the new corporate shares that are
being offered?
b. If the stock has a P/E ratio of 23 immediately after the offering, what will
the stock price be?
c. Should the founding stockholders be pleased with the $40 they receive for
their shares?