CORPORATE FINANCE-ACCESS >CUSTOM<
11th Edition
ISBN: 9781260170016
Author: Ross
Publisher: MCG CUSTOM
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Question
Chapter 20, Problem 6QP
Summary Introduction
To determine: The number of shares needed to be sold.
Flotation Costs:
The costs which are included in raising the capital through external sources is termed as flotation costs. The examples of flotation costs are underwriting commission, brokerage fee, and cost of printing prospectus.
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Students have asked these similar questions
The Elkmont Corporation needs to raise $51.1 million to finance its expansion into new markets. The company will sell new shares of equity via a general cash offering to raise the needed funds. The offer price is $27 per share and the company’s underwriters charge a spread of 7.5 percent. The SEC filing fee and associated administrative expenses of the offering are $1,451,000. How many shares need to be sold?
Note: Do not round intermediate calculations and enter your answer in shares, not millions of shares, rounded to the nearest whole number, e.g., 1,234,567.
A firm desires to sell stock to the public. The underwriter charges $0.4 million in fees and offers to buy six million shares from the firm at a price of $30 per share. In addition, registration and audit fees total $120,000, and marketing and miscellaneous fees add up to another $65,000. The underwriter expects to earn gross proceeds per share of $36.
a) What is the issuing firm's out-of-pocket dollar transaction cost to issue the stock?
b) Immediately after the stock was issued, the stock price rose to $38. What is the issuing firm's opportunity cost?
c) What is the total issuance cost, including opportunity costs, as a percentage of the total funds available to the issuing firm?
Research walmart and Review its most recent 10-K report and announcement of quarterly or annual dividends per share, an announcement of a stock split of one to two and the purchase of treasury stock.
Choose ONE of the questions below to discuss:
Discuss the primary reporting alternatives the company has for the repurchase of its own shares and how each option would affect total shareholders’ equity.
How would the stock split of one for two be accounted for and how would it affect shareholder’s equity and why?
How would the company account for the cash dividends from declaration to the date of payment? What are the important dates for dividends payment and how would it affect the balance sheet and why?
Work to demonstrate your understanding of the material from this module and, where necessary, include your sources.
Chapter 20 Solutions
CORPORATE FINANCE-ACCESS >CUSTOM<
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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