CORPORATE FINANCE (LL)-W/ACCESS
11th Edition
ISBN: 9781259976360
Author: Ross
Publisher: MCG
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Chapter 20, Problem 1QP
Rights Offerings Chanelle, Inc., is proposing a rights offering. Presently, there are 625,000 shares outstanding at $87 each. There will be 85,000 new shares offered at $78cach.
- a. What is the new market value of the company?
- b. How many rights arc associated with one of the new shares?
- c. What is the ex-rights price'!
- d. What is the value of a right?
- e. Why might a company have a rights offering rather than a general cash offer?
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QUESTION 3 (a) Win Corp. is proposing a rights offering. Presently there are 650,000 sharesoutstanding at RM21 each. There will 40,000 new shares offered at RM15 each.Calculate the following:(i) New market value of the company.(ii) Numbers of rights that associated with one new shares.(iii) The ex-rights price.(iv) The value of a right.(v) Total flotation cost. Given the flotation cost is 7 percent.
Walker Machine Tools has 5.6 million shares of common stock outstanding. The current market price of Walker common stock is $54 per share rights-on. The company’s net income this year is $18.00 million. A rights offering has been announced in which 560,000 new shares will be sold at $48.50 per share. The subscription price plus four rights is needed to buy one of the new shares.a. What are the earnings per share and price-earnings ratio before the new shares are sold via the rights offering? (Do not round intermediate calculations and round your answers to 2 decimal places.)
Earnings per share
Price-earnings ratio
b. What would the earnings per share be immediately after the rights offering? What would the price-earnings ratio be immediately after the rights offering? (Assume there is no change in the market value of the stock, except for the change when the stock begins trading ex-rights.) (Do not round intermediate calculations and round your…
Toronto Corporation wants to raise $1,210,000 via a rights offering. The company currently has 220,000 shares of common stock outstanding that sells for $32 per share. The issue will allow current stockholders to purchase one additional share for 5 rights.
a) What will be the ex-rights stock price, the value of a right, and the appropriate subscription price?
b) If 2 rights are needed to purchase on additional share, how does the stockholders’ wealth change?
c) Why do you think the company chose a rights issue rather than a general cash offer to raise new capital?
Chapter 20 Solutions
CORPORATE FINANCE (LL)-W/ACCESS
Ch. 20 - Prob. 1CQCh. 20 - Debt versus Equity Flotation Costs Why arc the...Ch. 20 - Prob. 3CQCh. 20 - Prob. 4CQCh. 20 - Prob. 5CQCh. 20 - Prob. 6CQCh. 20 - Prob. 7CQCh. 20 - Prob. 8CQCh. 20 - Prob. 9CQCh. 20 - IPO Pricing The following material represents the...
Ch. 20 - Competitive and Negotiated Offers What are the...Ch. 20 - Seasoned Equity Offers What are the possible...Ch. 20 - Prob. 13CQCh. 20 - Prob. 14CQCh. 20 - Prob. 15CQCh. 20 - Rights Offerings Chanelle, Inc., is proposing a...Ch. 20 - Prob. 2QPCh. 20 - Prob. 3QPCh. 20 - Prob. 4QPCh. 20 - Calculating Flotation Costs The St. Anger...Ch. 20 - Prob. 6QPCh. 20 - Calculating Flotation Costs The Green Hills Co....Ch. 20 - Prob. 8QPCh. 20 - Stock Offerings The Newton Company has 50,000...Ch. 20 - Dilution Teardrop, Inc., wishes to expand its...Ch. 20 - Dilution The all-equity firm Metallica Heavy Metal...Ch. 20 - Prob. 12QPCh. 20 - Prob. 13QPCh. 20 - Prob. 14QPCh. 20 - Prob. 15QPCh. 20 - Prob. 16QPCh. 20 - Prob. 17QPCh. 20 - Prob. 18QPCh. 20 - Prob. 1MCCh. 20 - Prob. 2MCCh. 20 - Prob. 3MCCh. 20 - Prob. 4MC
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