Total number of new shares.

Question

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Answer 1

Question

Chapter 15, Problem 7PS

a)

Summary Introduction

To determine: Total number of new shares.

b)

Summary Introduction

To determine: Amount of new investment,

c)

Summary Introduction

To determine: Value of company after the issue.

d)

Summary Introduction

To determine: Total number of shares after issue.

e)

Summary Introduction

To determine: Stock price after issue.

f)

Summary Introduction

To determine: The value of opportunity.

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Jumbo Transport, an air-cargo company, expects to have earnings per share of $2.00 in the coming year. It decides to retain 10% of these earnings in order to lease new aircraft. The return on this investment will be 25%. If its equity cost of capital is 10%, what is the expected share price of Jumbo Transport? O A. $16.80 O B. $24.00 O C. $19.20 O D. $14.40

Assume that DroneTech's 3 year pro-forma is below. Assume that the appropriate discount rate is 20%. What is the fair market equity value (present value of earnings) of this company. Choose from the following "rounded" answers the one that is closest to the equity value that you calculate Revenues Expenses Profit O $537,800 O $492.800 O $479.166 O$441,600 Year 1 $400,000 $200,000 $200,000 Year 2 $500,000 $300,000 $200,000 Year 3 $700,000 $400,000 $300,000

Answer 2

Question

Chapter 15, Problem 7PS

a)

Summary Introduction

To determine: Total number of new shares.

b)

Summary Introduction

To determine: Amount of new investment,

c)

Summary Introduction

To determine: Value of company after the issue.

d)

Summary Introduction

To determine: Total number of shares after issue.

e)

Summary Introduction

To determine: Stock price after issue.

f)

Summary Introduction

To determine: The value of opportunity.

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 3

Question

Chapter 15, Problem 7PS

a)

Summary Introduction

To determine: Total number of new shares.

b)

Summary Introduction

To determine: Amount of new investment,

c)

Summary Introduction

To determine: Value of company after the issue.

d)

Summary Introduction

To determine: Total number of shares after issue.

e)

Summary Introduction

To determine: Stock price after issue.

f)

Summary Introduction

To determine: The value of opportunity.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 15, Problem 7PS

a)

Summary Introduction

To determine: Total number of new shares.

b)

Summary Introduction

To determine: Amount of new investment,

c)

Summary Introduction

To determine: Value of company after the issue.

d)

Summary Introduction

To determine: Total number of shares after issue.

e)

Summary Introduction

To determine: Stock price after issue.

f)

Summary Introduction

To determine: The value of opportunity.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 5

Chapter 15, Problem 7PS

a)

Summary Introduction

To determine: Total number of new shares.

b)

Summary Introduction

To determine: Amount of new investment,

c)

Summary Introduction

To determine: Value of company after the issue.

d)

Summary Introduction

To determine: Total number of shares after issue.

e)

Summary Introduction

To determine: Stock price after issue.

f)

Summary Introduction

To determine: The value of opportunity.

Answer 6

Chapter 15, Problem 7PS

a)

Summary Introduction

To determine: Total number of new shares.

Answer 7

Chapter 15, Problem 7PS

a)

Summary Introduction

To determine: Total number of new shares.

Answer 8

b)

Summary Introduction

To determine: Amount of new investment,

Answer 9

b)

Summary Introduction

To determine: Amount of new investment,

Answer 10

c)

Summary Introduction

To determine: Value of company after the issue.

Answer 11

c)

Summary Introduction

To determine: Value of company after the issue.

Answer 12

d)

Summary Introduction

To determine: Total number of shares after issue.

Answer 13

d)

Summary Introduction

To determine: Total number of shares after issue.

Answer 14

e)

Summary Introduction

To determine: Stock price after issue.

Answer 15

e)

Summary Introduction

To determine: Stock price after issue.

Answer 16

f)

Summary Introduction

To determine: The value of opportunity.

Answer 17

f)

Summary Introduction

To determine: The value of opportunity.

Answer 18

Expert Solution & Answer

Answer 19

Expert Solution & Answer

Answer 20

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Answer 21

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Total number of new shares.

Solution Summary: The author calculates the total number of new shares and the value of the company after the issue.

To determine: Total number of new shares.

To determine: Amount of new investment,

To determine: Value of company after the issue.

To determine: Total number of shares after issue.

To determine: Stock price after issue.

To determine: The value of opportunity.

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Chapter 15 Solutions