In order to raise money, existing corporations can sell more shares in an initial public offering (IPO).   Question 10 options:   True   False

Q2. Many corporations do not pay dividends, why are investors willing to by their stock?

True or False: The following statement accurately describes how firms make decisions related to issuing new common stock. Taking flotation costs into account will reduce the cost of new common stock. False: Flotation costs are additional costs associated with raising new common stock. True: Taking flotation costs into account will reduce the cost of new common stock, because you will multiply the cost of new common stock by 1 minus the flotation cost-similar to how the after-tax cost of debt is calculated Alpha Moose Transporters is considering investing in a one-year project that requires an initial investment of $475,000. To do so, it will have issue new common stock and will incur a flotation cost of 2.00%. At the end of the year, the project is expected to produce a cash inflow of $550,000. The rate of return that Alpha Moose expects to earn on its project (net of its flotation costs) is (rounded to two decimal places) Sunny Day Manufacturing Company has a current stock price of…

[S1] By executing a rights offering, we acknowledge the preemptive right of current ordinary shareholders. [S2] When an initial public offering has been made, the underwriter would remit to the issuing entity cash equal to the total issue price less any issuance cost chargeable against the former. *a. Only S1 is true.b. Only S2 is true.c. Both are true.d. Both are false.

Question 1 LBO funds exit their investments primarily through the IPO process. O True O False

Which of the following statements is false?    options:   Outstanding shares equals issued shares minus treasury shares.   Equity value equals shares outstanding times share price.   Equity value equals enterprise value plus debt.   Authorized shares might be interesting but not relevant in any of our calculations   Enterprise value equals equity value plus debt value.

4

Briefly explain the term initial public offering (IPO). Why would a company choose to go public?