1).Green Lantern Enterprises has just completed an initial public offering. The firm sold 4,500,000 new shares at an offerprice of$15.50 per share.Theunderwritering spreadwas$0.84 a share. The firm incurred $300,000 in legal, administrative, and other costs.

What was the cost to the firm of the underwriting spread?

2).An auto plant that costs $80 million to build can produce a new line of cars that will produce net cash flow of $30 million per year if the line is successful, but only $7.5 million per year if it is unsuccessful. You believe that the probability of success is about 80 percent. The auto plant is expected to have a life of 27 years and the opportunity cost of capital is 6 percent.

What is the expected net present value of building the plant?

3).Solo Inc. is proposing a rights offering. Presently there are 497,000 shares outstanding at $86 each. There will be 71,000 new shares offered at $60 each. What is the market value of the company after the offering is complete?