1. Norman Internet Service Company is interested in selling common stock to raise capitol for capacity expansion. The firm has consulted First Tulsa Company, a large underwriting firm, which believes that the stock can be sold for $50 per share. The underwriter's investigation found that its administrative costs will be 2.5% of the sale price, and its selling cost will be 2.0 percent of the sale priced. If the underwriter requires a profit equal to 1 percent of the sale price, how much, in dollars, will the spread have to be to cover the underwriters' cost and profit?
2. The Norman company needs to raise $50 million of new equity capitol. Its common stock is currently selling for $50 per share. The investment backers require and underwriting spread of 3 percent of the offering price. The company's legal, accounting, and printing expenses, associated with the seasoned offering, are estimated to be $750,000. How many new shares must the company sell to net $50 million?
Use the information below to answer questions a, b, and c
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The Holyoke Corporation has 120,000 shares outstanding with a current market price of $8.10 per share. The company needs to raise an additional $36,000 to finance new expenditures, and has decided on a rights issue. The issue will allow current stockholders to purcha
Rights. Associated Breweries is planning to market unleaded beer. To finance the venture, it proposes to make a rights issue with a subscription price of $10. One new share can be purchased for each two shares held. The company currently has outstanding 100,000 shares priced at $40 a share. Assuming that the new money is in
Scenario: The tsetsekos Company was planning to finance an expansion. The principal executives of the company all agreed that an industrial company such as theirs should finance growth by means of common stock rather than by debt. However, they felt that the current $42 per share price of the company's common stock did not refle
Rights: Summit Corp.'s stock is currently selling at $13 per share. There are 1 million shares outstanding. The firm is planning to raise $2 million to finance a new project. What are the ex-rights stock price, the value of a right, and the appropriate subscription prices under the following scenarios?
a. Two shares of outsta
You have been asked to calculate the weighted average cost of capital for Future Flow Enterprises (FFE) and have been provided with the following information to complete the task.
The company's effective tax rate is 40%
FFE currently has a bond issue outstanding, with a market price of $1,136.28 per $1,000
A company wants to raise $20 million. Its stock price is now $20 per share. The new issue will be priced at $18 per share. The underwriters' compensation will be 5 percent of the issue price. The firm will also incur expenses of $200,000.
1. How many shares of stock must be sold for the company to net $20 million after co
Maynard Steel plans to pay a dividend of $3 this year. The company has an expected earnings growth rate of 4% per year and an equity cost of capital of 10%.
a. Assuming Maynard's dividend payout rate and expected growth rate remains constant, and Maynard does not issue or repurchase shares, estimate Maynard's share price.
In the following situation, I am having problems identifying the related tax issue.
Ms. Lunai is single and expects her 2003 taxable income to be $60,000. On October 1, 2003, she purchased 100 shares of Skyrocket Inc. for $10 per share. On December 15, 2003, the stock traded at $15 per share. Ms. Lunai is considering wheth
4) The Riley Corporation currently has 100,000 shares outstanding that are selling at $50 per share. It needs to raise $900,000. Net income after taxes is $500,000. Its vice president of finance and its investment banker have decided on a rights offering, but are not sure how much to discount the subscription price from the
1. A firm generated free cash flow of 2348 million and paid net interest of 23 million after tax. It paid a dividend of 14$ million and issued shares for 54 million. There were no share repurchases. What did the treasurer do with the remaining cash flow and for how much?
2. A firm generated a negative free cash flow of 1857 m
