Marseille Manufacturing (MM) is considering raising money through a rights offering. MM currently has 10 million shares outstanding selling for €20 per share.  Current shareholders will receive one right per share.  Five rights are required to buy one share for €15.  Will the rights be exercised?  How much money will

You need to choose between making a public offering and arranging a private placement. In each case, the issue involves $10 million face value of 10-year debt. You have the following data for each: • A public issue. The interest rate on the debt would be 8.5%, and the debt would be issued at face value. The underwriting spread would be 1.5%, and other expenses would be $80,000. A private placement. The interest rate on the private placement would be 9% , but the total issuing expenses would be only $30,000 a-1. Calculate the net proceeds from public issue. Note: Enter your answer in dollars not millions of dollars. a-2. Calculate the net proceeds from private placement. Note: Enter your answer in dollars not millions of dollars. b-1. Calculate the Present Value of the extra interest on the private placement. Note: Do not round intermediate calculations. Enter your answer in dollars not millions of dollars. Round your answer to the nearest whole dollar amount. b-2. Other things being…

If the net present value of a project is -$10 million, which of the following statements is the most correct? a. We accept the project because net profit increases by $10 million b. We reject the project because net profit decreases by $10 million c. We accept the project because shareholder value increases by $10 million d. We reject the project because share price decreases by $10 e. We reject the project because shareholder value decreases by $10 million

You own a one-year European call option to buy one acre of Los Angeles real estate. The exercise price is $2.03 million. Suppose the land is occupied by a warehouse generating rents of $165,000 after real estate taxes and all other out-of-pocket costs. The present value of the land plus the warehouse is $1.73 million. The annual standard deviation is 18% and the interest rate is 11%.How much is your call worth? (Enter your answer in dollars not in millions. Do not round intermediate calculations.)

Projects Y and Z are mutually exclusive projects. Assume the company has a WACC of 14%. Year Project Y Project Z 0 -$1,500 -$1,500 1 200 900 2 400 600 3 600 300 4 1,000 200 What is the NPV of project Y?  What is the NPV of project Z? At what WACC should the company be indifferent whether to accept or reject project Z?

Spot price for gold is $500. Forward contracts are available to buy or sell gold at $550 in one year. An arbitrageur can borrow or invest money at 5% per year. Assume that the cost of storing gold is zero and that gold provides no income. If the one year forward price for gold is $505 rather than $550, how to set up arbitrage positions? And how much is your profit?