Suppose that a high tech firm raises $150 million in an IPO. The firm receives $27 per share, and the stock sold to the public at $30 per share. The firm's legal fees, SEC registration fees, and other administrative costs are $410,000. The firm's stock price increases 13.5 percent on the first day. What is the firm's total cost of issuing the securities? $33,635,000 $20,250,000 $35,660,000 $15,000,000

Suppose that a high tech firm raises $150 million in an IPO. The firm receives $27 per share, and the stock sold to the public at $30 per share. The firm's legal fees, SEC registration fees, and other administrative costs are $410,000. The firm's stock price increases 13.5 percent on the first day. What is the firm's total cost of issuing the securities? $33,635,000 $20,250,000 $35,660,000 $15,000,000

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

See similar textbooks

Similar questions

Borg Security Systems is considering the sale of 12,000 shares of stock to finance development of a new security product. The firm has 40,000 shares of common stock outstanding, par value of $1.00 per share. The firm has $60,000 in additional paid-in capital and $80,000 in retained earnings. Borg's investment bankers estimate that new shares will bring in $5.15 per share. If Borg goes ahead with the new stock issue, what will be the change in book value per share? Group of answer choices −$1.00 +$0.15 +$0.56 +$1.00 $0
Help
BQ, Incorporated, is considering making an offer to purchase iReport Publications. The vice president of finance has collected the following information: BQ iReport Price-earnings ratio 12.2 8.8 Shares outstanding 1,500,000 165,000 Earnings $ 4,600,000 $ 680,000 Dividends $ 960,000 $ 410,000 BQ also knows that securities analysts expect the earnings and dividends of iReport to grow at a constant rate of 4 percent each year. BQ management believes that the acquisition of iReport will provide the firm with some economies of scale that will increase this growth rate to 6 percent per year. a. What is the value of iReport to BQ? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What would BQ’s gain be from this acquisition? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. If BQ were to offer $36 in cash for each share of iReport, what would the…
An all-equity firm currently has 1,000,000 shares of stock outstanding and is considering borrowing $5,000,000 at 10% and buying back one-fourth of those shares. Assume a tax rate of 30% and EBIT is $ 1,500,000. Should this company undertake the capital restructuring and why?
Vijay
Suppose that the newspaper publishing company described above expected net earnings is $85 million and the firm is going public and will issue 15 million shares of stock. What is the price of the IPO using the P/E ratio if the forward P/E of comparable newspapers is 15x?
A firm goes public. The firm receives $35 for each of the 7.75 million shares sold. The initial offering price was $37 per share, and the stock rose to $38.25 per share is the first few minutes of trading. The firm paid $2,085,000 in direct legal and other costs and $833,000 in indirect cost. What were the underwrites spread of this offer?
Caspian Water needs to raise $59.00 million by issuing additional shares of stock. If the market estimates Caspian Water will pay a dividend of $2.12 next year (D1 2.12), which will grow at 3.99% forever and the cost of equity to be 12.82%then how many shares of stock must the firm sell? 1 ) None of the answers in this list is within 100 shares of the correct answer 2) 312,890 3) 2,457,406 4 ) 4,128,970 5 ) 915,939 6 ) 2.975,934
Cullumber, Inc., a high-technology firm in Portland, raised a total of $60 million in an IPO. The company received $27 of the $30 per share offering price. The firm’s legal fees, SEC registration fees, and other out-of-pocket costs were $350,000. The firm’s stock price increased 17 percent on the first day of trading. What was the total cost to the firm of issuing the securities?
A firm goes public. The firm receives $38 for each of the 4.5 million shares sold. The initial offering price was $40.25 per share, and the stock rose to $43.15 per share is the first few minutes of trading. The firm paid $2,485,000 in direct legal and other costs and $665,800 in indirect cost. What were the total direct cost of this offer?
River Cruises is all-equity-financed with 100,000 shares. It now proposes to issue $300,000 of debt at an interest rate of 12% and use the proceeds to repurchase 30,000 shares at $10 per share. Profits before interest are expected to be $130,000. What is the ratio of price to expected earnings for River Cruises before it borrows the $300,000? What is the ratio after it borrow?
A firm has 5 million shares outstanding with a market price of $35 per share. The firm has $10 million in extra cash (short-term investments) that it plans to use in a stock repurchase; the firm has no other financial investments or any debt. What is the firm's value of operations after the repurchase? Enter your answer in millions. For example, an answer of $1.23 million should be entered as 1.23, not 1,230,000. Round your answer to two decimal places. $ million How many shares will remain after the repurchase? Round your answer to the nearest whole number. shares

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS