FARO Technologies, whose products include portable 3D measurement equipment, recently had 29 million shares outstanding trading at $25 a share. Suppose the company announces its intention to raise $320 million by selling new shares.

b. How large a loss in dollar terms will existing FARO shareholders experience on the announcement date, based on studies that show losses are 30% of the size of the new issue?

c. What percentage of the value of FARO’s existing equity prior to the announcement is this expected gain or loss? (Round your answer to 1 decimal place.)

d. At what price should FARO expect its existing shares to sell immediately after the announcement? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Answer rating: 100% (QA)

To find the loss in dollar terms for existing FARO shareholders we first calculate the size of the n... View the full answer