Calculating Flotation Costs the Huff Co, has just gone public. Under a firm commitment agreement, Huff received
Question:
Calculating Flotation Costs the Huff Co, has just gone public. Under a firm commitment agreement, Huff received $15.05 for each of the 5 million shares sold. The initial offering price was $26 per share, and the stock rose to $19.50 per share in the first few minutes of trading. Huff paid $800,000 in direct legal and other costs, and $250,000 in indirect costs, what was the flotation cost as a percentage of funds raised?
Step by Step Answer:
We need to calculate the net amount raised and the costs associated with the offer The net amount ra...View the full answer
Fundamentals of Corporate Finance
ISBN: 978-0077861629
8th Edition
Authors: Stephen A. Ross, Randolph W. Westerfield, Bradford D.Jordan
Related Video
Stocks (also known as equities) are securities that represent ownership in a company. They are issued by companies to raise capital, and when an individual buys stocks, they become a shareholder in that company. Investing in stocks can be a way for individuals to potentially earn a return on their investment through dividends and capital appreciation. However, investing in stocks also carries a level of risk, as the value of the stock can fluctuate based on various factors such as the financial performance of the company and general market conditions. For companies, issuing stocks can be a way to raise funds for growth and expansion. When a company goes public by issuing an initial public offering (IPO), it can raise significant capital by selling ownership stakes to the public. Companies can also issue additional stock offerings to raise additional capital as needed.
Students also viewed these Corporate Finance questions
-
Bellevue Co. has just gone public. Under a firm commitment agreement, the company received $36.27 for each of the 7.5 million shares sold. The initial offering price was $39 per share and the stock...
-
Calculating Flotation Costs the Educated Horses Corporation needs to raise $40 million to finance its expansion into new markets. The company will sell new shares of equity via a general cash...
-
A firm has 50 million common shares outstanding, on which it pays a quarterly dividend of $0.20 per share. The firms capital structure also includes two million cumulative preferred shares with a $25...
-
Verify that the functions are probability density functions for a continuous random variable X over the given interval. Determine the specified probability. f(x) = xe over [0, ), P(1 X 3)
-
In Denver, children bring their old jack-o-lanterns to the top of a tower and compete for accuracy in hitting a target on the ground (FIGURE 4-21). Suppose that the tower is 9.0 m high and that the...
-
A good friend of yours, Andrew Waters, has decided to leave his corporate job in order to launch a private SEO (search engine optimization) consulting firm. He is putting together his business plan...
-
Quick Copies Company is a small printing and copying firm with three high-speed offset printing presses, five copiers (two color and three black and white), one collator, one cutting and folding...
-
1. How well do you think credit checks meet the effectiveness criteria of (a) Reliability; (b) Validity; (c) Ability to generalize results; (d) High utility; and (e) Legality? 2. For what kinds of...
-
Michelle got a new job through the McCartney Employment Agency. The job pays $49,400 per year, and the agency fee is equal to 35% of one month's pay. How much must Michelle pay the agency? Round to...
-
Comparative Statements of Retained Earnings for Renn Dever Corporation were reported as follows for the fiscal years ending December 31, 2022, 2023, and 2024. No preferred stock or potential common...
-
Calculating Flotation Costs in the previous problem, if the SEC filing fee and associated administrative expense of the offering are $900,000, how many shares need to be sold?
-
Price Dilution CEO, Inc., 100,000 shares of stock outstanding. Each share is worth $80 so the companys market value of equity is $800,000. Suppose the firm issues 20,000 new shares at the following...
-
Arnsparger Outdoors produces climbing gear specially designed to weather the toughest conditions. Arnsparger has developed and patented a process that leads to a substantially stronger rope than its...
-
A student's weekly meal budget is around $150. She eats five days a week on campus where she spends on average $6 in the cafeteria. What is the cafeteria's share of her wallet? %
-
Medicine Hat Industries gathered the following information for the month ended July 31: The static budget volume is 10,000 units of production per month. Overhead is allocated based on machine hours....
-
Consider the statement: If Bruce continues to learn more about photography, then he will not need to pay someone else to develop his photos. a) Write the contrapositive. b) Write the negation. c) If...
-
I need to conduct an interview for journalism. I am writing a news article on Disney Instagram Influencers. I need to come up with 10-15 questions to ask for the interviews. I want to know stuff...
-
Based on the MarketLive Report you just found. What is one of the company's threats as listed in the SWOT Analysis? (Important: To get this correct, use the MarketLive Report you found from the...
-
Find P(F). box is filled with several party favors. It contains 12 hats, 15 noisemakers, ten finger traps, and five bags of confetti. Let H = the event of getting a hat. Let N = the event of getting...
-
The process of collaborative goal setting by a manager and subordinate, the extent to which goals are accomplished is a major factor in evaluating and rewarding the subordinate's performance. It is...
-
How does the polar character of water molecules help to explain waters relatively large dielectric constant? (Figure 19.18) H 104.5 H O Schematic Inherent (polar) separation of charge e e ee ee aa...
-
What are some industries in which the use of lockboxes would especially benefit companies? Explain.
-
Suppose you are a financial manager at a big firm and you expect interest rates to decline in the near future. What current asset investment strategy would you recommend that the company pursue?
-
Why is the commercial paper market available only to the most creditworthy companies?
-
Saham dan obligasi sudah begitu mudah diperjualbelikan oleh masyarakat melalui aplikasi handphone, seperti Stockbit, Bibit, Pluang, Mobile banking, dsb. Cukup dengan modal mulai Rp100.000,-...
-
Consider a map marked with the locations of major cities and a table of pairwise distances between those cities. In which cases is each more useful? Choose the best answer. Group of answer choices...
-
Which of the following would NOT generally help increase overall PE's annual returns for a LBO transaction? Exiting the transaction earlier Issuing more debt for a dividend Decreasing capital...
Study smarter with the SolutionInn App