a. What percentage of the company will Jennifer own after the issue? Note: Round your answer to the nearest whole percentage. b. What will her holding be worth at the end of the first day's trading? c. Suppose the issue had been priced at $80. How many shares would the company have needed to sell to raise the same gross proceeds from the IPO?
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- Fishwick Enterprises has 222,500 shares outstanding, half of which are owned by Jennifer Fishwick and half by her cousin. The two cousins have decided to sell 115,000 shares in an IPO. Half of these shares would be issued by the company to raise new cash, and half would be shares that are currently held by Jennifer Fishwick. Suppose that the shares are sold at an issue price of $50 but rise to $80 by the end of the first day's trading. Suppose also that investors would have been prepared to buy the issue at $80. a. What percentage of the company will Jennifer own after the issue? (Round your answer to the nearest whole percentage.) b. What will her holding be worth at the end of the first day's trading? c. Suppose the issue had been priced at $80. How many shares would the company have needed to sell to raise the same gross proceeds from the IPO? d. What in this case would be Jennifer's wealth (cash plus the value of her remaining holding)? (Enter your answer in millions rounded to 1…Fishwick Enterprises has 220,000 shares outstanding, half of which are owned by Jennifer Fishwick and half by her cousin. The two cousins have decided to sell 110,000 shares in an IPO. Half of these shares would be issued by the company to raise new cash, and half would be shares that are currently held by Jennifer Fishwick. Suppose that the shares are sold at an issue price of $50 but rise to $80 by the end of the first day's trading. Suppose the issue had been priced at $80. How many shares would the company have needed to sell to raise the same gross proceeds from the IPO? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a b 35,800 с 34,375 d 40,200 43,500 Your answerFishwick Enterprises has 201,500 shares outstanding, half of which are owned by Jennifer Fishwick and half by her cousin. The two cousins have decided to sell 101,000 shares in an IPO. Half of these shares would be issued by the company to raise new cash, and half would be shares that are currently held by Jennifer Fishwick. Suppose that the shares are sold at an issue price of $50 but rise to $80 by the end of the first day’s trading. Suppose also that investors would have been prepared to buy the issue at $80. a. Percentage of ownership 20 % b. Stock value $4,020,000 c. Number of shares 63,125 d. Total wealth ?? million e. Cost of underpricing shares ?? million
- Portman has 1,000,000 shares outstanding, and Judy Davis, an investor, holds 15,000 shares at the current price as just found. Suppose Portman is considering issuing 125,000 new shares at a price of $18.20 per share. If the new shares are sold to outside investors, by how much will Judy's investment in Portman be diluted on a per-share basis? $0.76 per share $0.44 per share $0.36 per share $0.31 per share Thus, Judy's investment will be diluted, and Judy will experience a total ofTeasler Inc. currently trades at $40 and has 9 million shares outstanding with Net Income of $12 Million. The Board decides to use a rights offering to raise new capital. Each shareholder will receive one right for each share. Laila Sims currently owns 4,000 shares of Teasler stock. Four rights plus $34 cash are needed to buy one new share. The ex-rights date is in 30 days. a. What is the value of a right? b-1. How many of the new shares could Laila buy if she exercised all her rights? b-2. How much cash would this require? c. How many new shares is Teasler issuing and what are the proceeds? d. If the price of Teasler shares price moves to $30 what is the value of the right ( Assume still rights-on)You have decided to retire and want to sell your shares in a closely held, all equity firm. The other shareholders have agreed to have the firm borrow $954,200 to purchase your 6,500 shares of stock at the current market value. The total number of shares outstanding is 30,000. What will be the new price per share after the repurchase?
- Given that Local Care, Inc.'s stock is currently selling for $65 a share, calculate the amount of money that Elijah Pearson will make (or lose) on each of the following transactions. Assume that all transactions involve 100 shares of stock, and ignore brokerage commissions. Input all answers as positive values. He short-sells the stock and then repurchases the borrowed shares at $85.Total of $ . He buys the stock and then sells it some time later at $85.Total of $ . He short-sells the stock and then repurchases the borrowed shares at $50.Total of $ .Jasmine Flowers must raise $227 million for its future expansion. To do so, Jasmine expects to issue new common stock. Investment bankers have informed the company the flotation costs will be 5.5 percent of the total amount issued plus $556,000 in additional costs associated with the issue. Jasmine can issue its stock for $40 per share. Determine how many shares Jasmine must sell to net $227 million after flotation costs. Round your answer to the nearest whole number. shares?Portman Industries just paid a dividend of $1.92 per share. The company expects the coming year to be very profitable, and its dividend is expected to grow by 20.00% over the next year. After the next year, though, Portman's dividend is expected to grow at a constant rate of 4.00% per year. Term Dividends one year from now (D1) Horizon value (P₁) Intrinsic value of Portman's stock Value 10.77% 11.20% 12.41% 8.96% The risk-free rate (TRF) is 5.00%, the market risk premium (RPM) is 6.00%, and Portman's beta is 1.70. Assuming that the market is in equilibrium, use the information just given to complete the table. What is the expected dividend yield for Portman's stock today? Now let's apply the results of your calculations to the following situation:
- Joyce has never invested in shares before. She has come to you, as a prospective finance graduate, for some advice. In your conversations with Joyce, you have determined her Required Rate of Return (RRR) to be 8.75%. d) Joyce decided to buy 200 000 shares in GGG Ltd., giving her 2% ownership in the company (GGG Ltd. currently has 10 000 000 issued shares). One year later, GGG Ltd. announces a private placement of a further 10,000,000 shares, in order to raise funds for their new venture: Project COVID. (i) Describe two features of a private placement of shares. (ii) What is the major disadvantage to Joyce of the above private placement? Include in your answer the effect on her ownership. (iii) Identify one other source of equity funding Joyce, as a shareholder, would prefer. Justify your choice.The Taussig Company, whose stock price is currently $20.50, needs to raise$15 million by issuing common stock. Underwriters have informed Taussig’s managementthat it must price the new issue to the public at $20 per share to ensurethat all shares will be sold. The underwriters’ compensation will be 7 percent of theissue price, so Taussig will net $18.60 per share. The company will also incurexpenses in the amount of $252,000. How many shares must Taussig sell to net$15 million after underwriting and flotation expenses?Lancaster Corporation, an investment banking company, often has extra cash to invest. Suppose Lancaster buys500 shares of Knight Corporation stock at $40 per share, representing less than 5% of Knight’soutstanding stock. Lancaster expects to hold the Knight stock for one month and then sell it.The purchase occurs on December 15, 2018. On December 31, the market price of one share ofKnight stock is $47 per share.Requirements1. What type of investment is this for Lancaster? Give the reason for your answer.2. Record Lancaster’s purchase of the Knight stock on December 15 and the adjustment tomarket value on December 31.3. Show how Lancaster would report this investment on its balance sheet at December 31 andany gain or loss on its income statement for the year ended December 31, 2018