What is the total dollar amount that the shareholder above will have to pay to acquire the shares? $15 million $1 million $10 million $20 million
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- Fishwick Enterprises has 201,500 shares outstanding, half of which are owned by Jennifer Fishwick and half by her cousin. The two cousins have decided to sell 101,000 shares in an IPO. Half of these shares would be issued by the company to raise new cash, and half would be shares that are currently held by Jennifer Fishwick. Suppose that the shares are sold at an issue price of $50 but rise to $80 by the end of the first day’s trading. Suppose also that investors would have been prepared to buy the issue at $80. a. Percentage of ownership 20 % b. Stock value $4,020,000 c. Number of shares 63,125 d. Total wealth ?? million e. Cost of underpricing shares ?? millionXyna Company has 400,000 shares of common stock outstanding and is considering issuing another 100,000 shares through stock rights. Each current stockholder will obtain one right per share. Mr. A owns 40,000 shares of common stock. 1. What amount of each new share of common stock can a stockholder acquire by each right? 2. How many rights are required to purchase one new share of common stock? 3. How many new shares will Mr. A be able to obtain? 4. What will Mr. A’s percentage interest in the company be after exercising all his rights? 5. Did his percentage ownership change after exercising his rights relative to what it was before the rights offering?You are the CFO of a company that has a market capitalization of $20 billion. The firm has 50 million shares outstanding, so the shares are trading at $400 per share. You need to raise $1 billion and have announced a rights issue. Each existing shareholder is sent one right for every share he or she owns. You have not decided how many rights you will require to purchase a share of new stock. You will require either 16 rights to purchase one share at a price of $320 per share, or 30 rights to purchase two new shares at a price of $300 per share. a)How much money is raised under 2 approaches? b)What are the new stock prices after the issuance (under 2 approaches) c)Will the existing shareholders exercise their rights to participate in the SEO? Justify your answer d) What is the dollar value of one issuance right for a shareholder who owns a single share of stock e) are the shareholders expected to be worse off with, better off with, or indifferent to the 2 approaches? Justify your answer
- 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?Lara’s Inc. is currently an unlevered firm with 450,000 shares of stock outstanding, with a market price of $15 a share. The company has earnings before interest and taxes of $314,000. Lara's met with his bankers, Warne Incorporated and agreed to borrow $825,000, at 5 percent. You are an ardent investor and you currently own 20,000 shares of Lara's stock. If you seek to unlevered your position; how many shares of Lara's stock will you continue to own, if you can loan out funds at 5 percent interest? Ignore taxes in your deliberations. Kindly show all workingsFinch, Incorporated, is debating whether or not to convert its all-equity capital structure to one that is 20 percent debt. Currently, there are 17,000 shares outstanding and the price per share is $47. EBIT is expected to remain at $39,100 per year forever. The interest rate on new debt is 6.5 percent, and there are no taxes. Allison, a shareholder of the firm, owns 150 shares of stock. What is her cash flow under the current capital structure, assuming the firm has a dividend payout rate of 100 percent? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16 What will Allison's cash flow be under the proposed capital structure of the firm? Assume she keeps all 150 of her shares. Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Assume that Allison unlevers her shares and re-creates the original capital structure. What is her cash flow now?
- Xyna Company has 400,000 shares of common stock outstanding and is considering issuing another 100,000 shares through stock rights. Each current stockholder will obtain one right per share. Mr. A owns 40,000 shares of common stock. 1. What will Mr. A’s percentage interest in the company be after exercising all his rights? 2. Did his percentage ownership change after exercising his rights relative to what it was before the rights offering?Hootie and the Blowfish have net income of $1,000,000. They pay preferred dividends of 100,000 during the year and have 200,000 in income attributable to non-controlling interests. They have 10,000 shares outstanding at the beginning of the year and issue 2,000 shares on April 1 and buy back 8,000 treasury shares at a cost of $10 a piece on October 1. What is Hootie's EPS?Larry also holds 2,000 shares of common stock in a company that only has 20,000 shares outstanding. The company’s stock currently is valued at $48.00 per share. The company needs to raise new capital to invest in production. The company is looking to issue 5,000 new shares at a price of $38.40 per share. Larry worries about the value of his investment. Larry’s current investment in the company is . If the company issues new shares and Larry makes no additional purchase, Larry’s investment will be worth . This scenario is an example ofdilution . Larry could be protected if the firm’s corporate charter includes apreemptive right provision. If Larry exercises the provisions in the corporate charter to protect his stake, his investment value in the firm will become
- You have decided to retire and want to sell your shares in a closely held, all equity firm. The other shareholders have agreed to have the firm borrow $954,200 to purchase your 6,500 shares of stock at the current market value. The total number of shares outstanding is 30,000. What will be the new price per share after the repurchase?1. Northstar Corporation is considering to pay $10,000 the shareholders. There are 1,000 shares outstanding and the current share price is $50, the current earnings are $20 per share. a. What is the ex-dividend price of Northstar' stock? b. How can Bob, who owns 50 shares of Northstar, achieve a zero payout policy on his own? c. How do the stock price and shares outstanding change if the company spend $10,000 to repurchase stocks rather than paying cash dividends? d. How the EPS and PE ratio change after the dividend payment and share repurchase, respectively? e. If the payout ratio remain consistent, the adjustment rate is 0.3 defined in the Lintner model, and this company expects to have an earnings per share of 25 for next year, what is the dividend one year from now?Jhom owns 85 shares of common stock worth 500 per value. If the corporation declares a 6 1/4% dividend (a) what is the total dividend that Jhom should get? (b) Did Jhom made the right decision to have a share in the market? Yes or No? Explain.