Magenta Corporation wants to raise $51 million in a seasoned equity offering, net of all fees. Magenta stock currently sells for $10 per share. The underwriters will require a spread of $0.5 per share, and indicate that the issue must be underpriced by 5 percent. In addition to the underwriter's fee, the firm will incur $2,000,000 in legal, accounting, and other costs. How many shares must Magenta sell? Note: Enter your answer in millions rounded to 3 decimal places. Number of shares million
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- Present Tense Tonic wants to raise $13 million to purchase equipment by issuing new securities. Management estimates the issue will cost the firm $875,500 for accounting, legal, and other costs. The underwriting spread is 6.5 percent and the issue price is $24 per share. How many shares of stock must be sold if the firm is to have sufficient funds remaining after costs to purchase all of the desired equipment? 19 01:15:32 Multiple Choice 608,010 shares 521,121 shares 618,338 shares 647,666 shares 582,139 sharesAssumptions: (a) Mr. X has a limited cash balance of P1,000,000.00. (b) The buying price of the stock is P10 per share (c) Mr. X wants to purchase 150,000 shares (d) The broker wants to lend Mr. X the deficit in exchange of 3% simple interest per month. (e) the transaction cost in buying the shares is 0.10 per share Variable rate plus P20,000 Fixed rate. (f) On September 1, 2021, Mr. X purchased 150,000 shares at 10 per share Using the above details, Assuming on October 1, 2021, Mr. X wants to sell the 150,000 shares to Mr. Y for 10.10 per share with a corresponding transaction cost of 0.05 per share Variable Rate plus P10,000 Fixed rate. What is the net income/loss of Mr. X in selling the stocks to Mr. Y? If you were the Financial Advisor of Mr. X, would you advise him to sell the stocks to Mr. Y? Why or why not?Assumptions: (a) Mr. X has a limited cash balance of P1,000,000.00. (b) The buying price of the stock is P10 per share (c) Mr. X wants to purchase 150,000 shares (d) The broker wants to lend Mr. X the deficit in exchange of 3% simple interest per month. (e) the transaction cost in buying the shares is 0.10 per share Variable rate plus P20,000 Fixed rate. (f) On September 1, 2021, Mr. X purchased 150,000 shares at 10 per share Using the above details, Assuming on October 1, 2021, Mr. X wants to sell the 150,000 shares to Mr. Y for 10.90 per share with a corresponding transaction cost of 0.05 per share Variable Rate plus P10,000 Fixed rate. What is the net income/loss of Mr. X in selling the stocks to Mr. Y after deducting transaction costs and interest payment to the broker? If you were the Financial Advisor of Mr. X, would you advise him to sell the stocks to Mr. Y? Why or why not?
- Q.An unlevered company that has a current value of $1,600,000 is considering borrowing $700,000 and using the borrowed funds to repurchase shares. The company can borrow at 5% and has a cost of equity of 13%. EBIT is expected to remain the same every year forever. Assume all available earnings are immediately distributed to common shareholders and all the M&M assumptions are satisfied. What is the company's EBIT according to M&M Proposition I without taxes?Question 2 A company is all equity financed with 18,000 shares outstanding and each share sells for $22. The company is debating of converting into a 40% debt capital structure, with 6% interest per annum. The cost of capital is currently 10%. Ignore taxes. You are required to answer the following: (a) What is the current market value of the company? (b) What is the market value of debt in the proposed debt capital structure? (c) How many shares must be repurchased in the proposed levered company? (d) What is the cost of equity in the levered company?三= Chapter 17, Comprehensive Problem, Jets Corporation Jet Corporation currently has 120,000 shares outstanding that are selling at $55 per share. It needs to raise $800,000. Net income after taxes is $400,000. Its vice president of finance and its investment banker have decided on a rights offering, but are not sure how much to discount the subscription price from the current market value. Discounts of 12 percent, 22 percent, and 42 percent have been suggested. Common stock is the sole means of financing for the Jets Согрoration. a. For each discount, determine the subscription price, the number of shares to be issued, and the number of rights required to purchase one share. (Round to one place after the decimal point where necessary.) b. Determine the value of one right under each of the plans. (Round to two places after the decimal point.) Compute the earnings per share before and immediately after the rights offering under a С. 10 percent discount from the market price. d. By what…
- cos The Elkmont Corporation needs to raise $51.8 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 $34 per share and the company's underwriters charge a spread of 8 percent. The SEC filing fee and associated administrative expenses of the offering are $1,458,000. 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. Number of shares offeredTask 7. YVONE Company considers issuing ordinary shares solely to finance the funding requirements of its long-term investment project. For the past several years the company has experienced a dividend growth rate of 3%. The estimated cost of the long-term investment project is P50 million. The expected dividend on ordinary share is P8 per share. The par value of the ordinary share is P100, but it is currently selling in the market at P145 per share. Required: Compute the cost of ordinary share. HSD-FO-003PROBLEM A. A. ABC Corp., expects a net income of Php. 250,000. The company has 10% of 5,000,000 Debentures. The equity capitalization rate of the company is 10%. 1. Calculate the value of the firm and overall capitalization rate according to the net income approach (ignoring income tax). 2. If the debenture debt is increased to Php. 750,000 and interest of debt is change to 8%. What is the value of the firm and overall capitalization rate? B. Yuki's projected net operating income of Php. 85,000. It has Php. 3,00,000, 5% debentures. 1. Calculate the value of the firm according to 10 net opening income and overall capitalization rate is 10%. 2. If debenture debt is increased to Php. 100,000. What is the value of the firm and the equity capitalization rate?
- An investment banker agrees to underwrite an issue of 10 million shares of stock for Rochester Industries on a best-efforts basis. The investment banker is able to sell 8 million shares for $10.50 per share, and it charges Rochester Industries $0.225 per share sold. What is the profit to the investment banker if it is able to sell 8 million shares for $10.50 per share? OA) Loss of $7,500,000. OB) Profit of $1,800,000. C) Profit of $7,000,000. D) Loss of $7,000,000. E) Profit of $1,000,000.Question 3 You own all the equity of R.G.C. I Ltd. The company has no debt. The company’s annual cash flow is GH¢900,000 before interest and taxes. The company tax rate is 35%. You have the option to exchange 1/2 of your equity position for 5% bonds with a face value of GH¢2,000,000. What is the value of the unlevered firm? What is the value of the levered firm? Assuming a bankruptcy cost of GH¢8000, what is the value of the levered firm after considering bankruptcy cost?a. An initial margin requirement is 54% and maintenance margin of 48%. An investor buys GPH, 9500 shares of stock on margin at Tk. 86.50 per share. The price of the stock subsequently drops to tk. 55.70. a. Find the amount investor has to deposit for initiating the transaction. b. What is the actual margin at tk. 54.25 share price is the account restricted? c. If the price rises to tk. 61.90, is there a margin call? d. Show the amount of margin call is required to bring back account into operational at price of tk. 63.10?