Preferred

Whitney Steele Case 13-03 Hearts ‘R Us Preferred Stock Classification 2/16/2015 To: Hearts ‘R Us From: 5110 Whitney Steele Re: Preferred Stock Classification Date: February 16, 2015 Background Hearts ‘R Us (the Company) is an early stage, non-public research and development medical device company. They are in the final stages of going to market with the Heart Valve System. Bionic Body (Bionic), a SEC registrant, could benefit from the approval of the Hear Valve System and will help finance. Hearts

Sheet FEED RESOURCE RECOVERY SERIES A PREFERRED STOCK FINANCING SUMMARY OF TERMS I. INTRODUCTION FEED Resource Recovery (the “Company”) is a company incorporated in the state of Massachusetts and currently has 20,000 ordinary shares issued which are held by the Founders Shane Etan, who holds 16,000 shares, and Ryan Begin who holds the remaining 4,000 shares. The Company desires to authorize the issue of 206,612 shares of Series A Preferred Stock to the investors, Group One Investment

following on Dec 31, 2011: Preferred stock- 6% $100 par, $4000 shares outstanding $400,000 Common Stock-$10 par, 60,000 shares outstanding $600,000 Paid-in capital in excess of par $200,000 Retained earnings $114,000 Total stockholders’ equity $1,314,000 Instructions: Assuming that all of the company’s retained earnings are to be paid out in dividends on 12/31/11 and that preferred dividends were last paid on 12/31/09, show how much the preferred and common stockholders should

|Purpose: |This is a long form annotated Venture Capital Term Sheet, proposing deal terms for investment by a venture | | |capitalist in an early-stage company. It is for a Series A Convertible Preferred Stock round of company financing. | | |The form is very pro-investor in its orientation. | Long Form Term Sheet for Potential Venture Investment[1] TERM

into the foreseeable future. The price of this stock is now $25.18. c. A bond that has a $1,000 par value and a coupon interest rate of 12.7%. A new issue would sell for $1,150 per bond and mature in 20 years. The firm’s tax rate is 34%. d. A preferred stock paying a 7.2% dividend on a $93 par value. If a new issue is offered, the shares would sell for $85.32 per share. 7. Salte Corporation is issuing new common stock at a market price of $27.24. Dividends last year were $1.47 and are expected

are used in its calculation. WACC is calculated by multiplying the cost of each capital component by its proportional weight and then summing then together. The capital components included in this calculation are a firms after-tax costs of debt, preferred stock, and common stock. DebtThe first component of a firms WACC is its cost of debt. This is the effective rate that a company pays on its current debt. Because interest expenses on debt are deductible, the after-tax cost is used in its calculation

only when each investment opportunity is evaluated with the WACC. Each dollar in the capital budget is considered part debt, part preferred stock and part common equity. Of course, the equity will come from either current retained earnings or the sale of new common stock. To find the WACC, the cost of each of the capital components mentioned above as debt, preferred stock and common equity are calculated

Solution: As the two different classes of common stock are likely to have different component costs, calculate the cost and weight for each separately. LG2 11-2 Why don’t we multiply the cost of preferred stock by 1 minus the tax rate, as we do for debt? Solution: Because dividends on preferred stock, unlike interest on debt, are paid out of after-tax income. LG2 11-3 Expressing WACC in terms of iE, iP, and iD, what is the theoretical minimum for the WACC? Solution: The theoretical minimum

Every company is a little bit different from the last. They produce different products, or provide different services. Some companies are small town corporate start-ups, while others are giant national mega-conglomerates. Amidst all the potential differences, however, there is one large similarity. The Generally Accepting Account Principles (GAAP). When it comes down to it, all companies are playing by the same rules. Some rules can apply more to one company than another, but everyone uses the same

 structure  and  rounds  of  financing   Analyze Metapath’s capital structure, in particular the various forms and prices of preferred stock from the multiple rounds of financing. How has this capital structure affected the offer from Robertson & Stephens? How would RSC’s participating preferred interact with other tranches of preferred stock?   The  RSC  offer  of  $11.75  million  is  more  than  Metapath  has  previously  raised  in