chapter 19 & 20
goodjob
chapter_20_-_own_excel.xls#1
| Again, Inc., is proposing a rights offering. Presently, there are 550,000 shares outstanding at $87 each. There will be 85,000 new shares offered at $81 each. | |||
| a. What is the new market value of the company? | |||
| b. How many rights are 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? | |||
| Shares outstanding | 550,000 | ||
| Price | $ 87.00 | ||
| New shares | 85,000 | ||
| New price | $ 81.00 | ||
| Output Area: | |||
| a. | New market value | ||
| b. | Number of rights needed | ||
| c. | P(x) | ||
| d. | Value of a right | ||
| e. | Right offer help in preventing the diluation for exisitng shareholder and its less costly than cash offer. |
&C&"Times New Roman,Regular"&12&A
&C&"Times New Roman,Regular"&12Page &P
#5
| The St. Anger Corporation needs to raise $45 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. If the offer price is $31 per share and the company’s underwriters charge a spread of 7 percent, how many shares need to be sold? | |||
| Proceed Required before underwriting Spread = 45000000/(1-7%) | |||
| Number of shares to be sold = (48387097/31) = | |||
| Funds needed | $ 45,000,000 | ||
| Offer price | $ 31 | ||
| Spread | 7% | ||
| Output Area: | |||
| Proceeds from sale | |||
| Number of shares offered |
&C&"Times New Roman,Regular"&12&A
&C&"Times New Roman,Regular"&12Page &P
#8
| Raggio, Inc., has 135,000 shares of stock outstanding. Each share is worth $75, so the company’s market value of equity is $10,125,000. Suppose the firm issues 30,000 new shares at the following prices: $75, $70, and $65. What will the effect be of each of these alternative offering prices on the existing price per share? | |||
| Price $75 | |||
| Price $70 | |||
| Price $65 | |||
| Company equity | $ 10,125,000 | ||
| Shares outstanding | 135,000 | ||
| Share price | $ 75 | ||
| New shares issued | 30,000 | ||
| New price: | |||
| Price 1 | $ 75 | ||
| Price 2 | $ 70 | ||
| Price 3 | $ 65 | ||
| Output Area: | |||
| New offering price: | |||
| New Overall Price | |||
| Share price drops by | |||
| New offering price: | |||
| New Overall Price | |||
| Share price drops by | |||
| New offering price: | |||
| New Overall Price | |||
| Share price drops by |
&C&"Times New Roman,Regular"&12&A
&C&"Times New Roman,Regular"&12Page &P
