Question: FARO Technologies, whose products include portable 3 D measurement equipment, recently had 3 4 million shares outstanding trading at $ 5 0 a share. Suppose

FARO Technologies, whose products include portable 3D measurement equipment, recently had 34 million shares outstanding trading at $50 a share. Suppose the company announces its intention to raise $370 million by selling new shares.
a. 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?
b. What percentage of the value of FAROs existing equity prior to the announcement is this expected loss?
c. At what price should FARO expect its existing shares to sell immediately after the announcement?

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