Canterbury, Inc., has 175,000 shares of stock outstanding. Each share is worth $68, so the company’s market value of equity is $11,900,000. Suppose the firm issues 30,000 new shares at the following prices: $68, $65, and $60. What will the effect be of each of these alternative offering prices on the existing price per share?
Answer to relevant QuestionsTeardrop, Inc., wishes to expand its facilities. The company currently has 5 million shares outstanding and no debt. The stock sells for $31 per share, but the book value per share is $7. Net income is currently $3.2 ...Explain what is meant by business risk and financial risk. Suppose Firm A has greater business risk than Firm B. Is it true that Firm A also has a higher cost of equity capital? Explain.Skillet Industries has a debt–equity ratio of 1.5. Its WACC is 9 percent, and its cost of debt is 5.5 percent. The corporate tax rate is 35 percent.a. What is the company’s cost of equity capital?b. What is the ...The owners’ equity accounts for Alexander International are shown here:Common stock ($.50 par value) ... $ 20,000Capital surplus......... 285,000Retained earnings6....... 38,120Total owners’ equity..... $933,120a. If ...The BlueSky lengthened its payables period to “control costs and optimize cash flow.” Exactly what is the cash benefit to BlueSky from this change?
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