Stone Shoe Co. has concluded that additional equity financing will be needed to expand operations and that the needed funds will be best obtained through a rights offering. It has correctly determined that as a result of the rights offering, the share price will fall from $65 to $63.18 ($65 is the “rights-on” price; $63.18 is the ex-rights price, also known as the when-issued price). The company is seeking $15 million in additional funds with a per-share subscription price equal to $50. How many shares are there currently, before the offering? (Assume that the increment to the market value of the equity equals the gross proceeds from the offering.)
Answer to relevant QuestionsThe St. Anger Corporation needs to raise $45 million to finance its expansion into new markets. The company will sell new shares of equity via a general cash offering to raise the needed funds. If the offer price is $31 per ...A company’s stock currently sells for $68 per share. Last week the firm issued rights to raise new equity. To purchase a new share, a stockholder must remit $11 and three rights. a. What is the ex-rights stock price? b. ...What are some of the potential problems with looking at IRRs when evaluating a leasing decision?Assume that the tax rate is 35 percent. You can borrow at 8 percent before taxes. Should you lease or buy?You work for a nuclear research laboratory that is contemplating leasing a diagnostic scanner (leasing is a common ...Many lessors require a security deposit in the form of a cash payment or other pledged collateral. Suppose Lambert requires Wildcat to pay a $500,000 security deposit at the inception of the lease. If the lease payment is ...
Post your question