Henrietta's Pine Bakery Corporation would like to raise $75 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 $15 per share and the company's underwriters charge a 6% spread, how many shares need to be sold?

Muskoka Tourism has announced a rights offer to raise $30 million for a new magazine, titled 'Discover Muskoka'. The magazine will review potential articles after the author pays a nonrefundable reviewing fee of $5,000 per page. The stock currently sells for $52 per share and there are 3.9 million shares outstanding.

Required

2. What is the maximum possible subscription price? What is the minimum?
4. If the subscription price is set at $46 per share, how many shares must be sold? How many rights will it take to buy one share?
6. What is the ex-rights price? What is the value of a right?

Northern Escapes Inc. has 225,000 shares of stock outstanding. Each share is worth $73, so the company's market value of equity is $16,425,000. Suppose the firm issues 30,000 new shares at the following prices: $73, $69, and $60. What will the effect be of each of these alternative offering prices on the existing price per share?

Answer rating: 100% (QA)

1 Henriettas Pine Bakery Corporation To raise 75 million with an offer price of 15 per share we can calculate the number of shares needed to be sold by dividing the total funds needed by the offer pri... View the full answer