Laos Company wants to raise its working capital. After analysis of the available options, the Company decides to issue 6,000 shares of P30 par preference shares with detachable warrants. The package of the shares and warrants sells for P120. The warrants enable the holder to purchase 6,000 shares of P10 par ordinary shares at P40 per share. Immediately following the issuance of the shares, the share warrants are selling at P10 per share. The market value of the preference shares without warrant is P90. What amount should be assigned to the share warrants issued?
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Laos Company wants to raise its
What amount should be assigned to the share warrants issued?
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- The Land Company wants to raise its working capital. After analysis of the available options, the Company decides to issue 6,000 shares of P30 par preference shares with detachable warrants. The package of the shares and warrants sells for P120. The warrants enable the holder to purchase 6,000 shares of P10 par ordinary shares at P40 per share. Immediately following the issuance of the shares, the share warrants are selling at P10 per share. The market value of the preference shares without warrant is P90.1. What amount should be assigned to the share warrants issued?2. Assuming that only 80% of the warrants are exercised, the entry to record the exercise of the warrants should include a?Bernard Corporation wants to obtain P4 million in its first public issue of common stock. After the issuance, the total market value of a stock is estimated at $10 million. At present, there are 120,000 closely-held shares. REQUIREMENTS: (a) What is the amount of new shares that must be issued to obtain the P4 million? (b) After the stock issuance, what will be the expected price per share?The Boat Works has decided to take the company public by offering a total of 150,000 shares of common stock to the public. The firm has hired an underwriter who arranges a firm commitment underwriting and suggests an initial selling price of $22 a share with a spread of 8 percent. As it turns out, the underwriters only sell 122,400 shares. How much cash will the firm receive from its first public offering?
- The Windsor 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 purchase one additional share for 20 rights at a subscription price of $6 per share. How many new shares must be issued? What will be the ex-rights stock price? If the ex-rights price were set at $7.90, would you as a potential new stockholder choose to buy shares ex-rights or buy shares at the old price and exercise your rights?Raven Co. has just gone public. Under a firm commitment agreement, Raven received $21.39 for each of the 20 million shares sold. The initial offering price was $23 per share, and the stock rose to $28.41 per share in the first few minutes of trading. Raven paid $950,000 in direct legal and other costs and $320,000 in indirect costs. What was the flotation cost as a percentage of funds raisedThe 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?
- In 2007, Xero Ltd. offered a subscription of 15 million shares at an offer price of $1.00 per share with the ability to accept oversubscriptions of up to $3 million. The prospectus detailed the requirement that all applications must be accompanied by payment in full for the total number of shares applied for and stated that application monies will be banked upon receipt into a designated bank account and held on trust pending the allocation of shares. Required: Assuming all 18 million shares were applied for, prepare the journal entry to record the receipt of application monies. Apart from recording a cash inflow, explain whether Xero should also record another asset, a liability, revenue or an expense upon collection of application monies, and explain why.Your company, Ohiobucks (OB), hires an investment bank to underwrite an issue of 10 million shares of OB stock on a best-effort basis. The investment bank sells 8 million shares and charges OB $0.225 per share sold. The price of each share is $10.50. How much will the investment bank earn after the issuance? A. $7.0 MM B. $7.5 MM C. $1.8 MM D. $1.0 MMBruce Wayne is going public with his new business. Berkman Investment Bank will be his banker and is doing a best efforts sale with a 3.8% commission fee. The SEC has authorized Wayne 4,790,000 shares for this issue. He plans to keep 1,180,000 shares for himself, hold back an additional 240,000 shares according to the green-shoe provision for Berkman Investment Bank, pay off Venture Capitalists with 530,000 shares, and sell the remaining shares at $16.46 a share. Given the bids at the auction distribute the shares to all bidders using a pro-rata share procedure, and assume Berkman Investment Bank takes its green-shoe shares. What is the total cash flow to Wayne after the sale? To Berkman Investment Bank? Bidder Quantity Bid Gotham Pension Fund 1,990,000 Clark Kent Investors 1,250,000 Central City Insurance 610,000 Arthur Curry 440,000 Barry Allen 350,000 Total 4,640,000
- The Telwar Company has just gone public. Under a firm commitment agreement, the company received $32.40 for each of the 4.14 million shares sold. The initial offering price was $34.80 per share, and the stock rose to $41.80 per share in the first few minutes of trading. The company paid $909,000 in legal and other direct costs and $258,000 in indirect costs. What was the flotation cost as a percentage of funds raised? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.On January 1, 2021, Kat Company has decided to raise additional capital by issuing P5,000,000 face value, 5 year bonds with interest rate of 12% payable annually on December 31. To help the sale of the bonds, share warrants are issued – one warrant for each P1,000 bond sold. The warrant entitles the holder to purchase 5 shares at P100 per share. The par value of the share is P50. It is reliably determined that the value of the warrants is P30 each time of issuance of the bonds. The bonds are sold for P5,100,000 with warrants but would have sold only at P4,657,000 without warrants with 14% effective yield. On December 31, 2021, 60% of the share warrants were exercised and the remaining warrants expire on April 1, 2022. 1. The total share premium to be credited to share premium – issuance on December 31, 2021 is: 2. The carrying amount of the bonds as of December 31, 2022 is:Howe Corporation plans to issue 7,400 shares of its $1 par value common stock for $34 per share and 800 shares of its $30 par value preferred stock for $33 per share. What would Howe’s legal capital be? What would be the amount of capital received in excess of the par value of common and preferred stock? Why is a distinction made between legal capital and total capital?