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...
-
Zumra Companys annual accounting year ends on December 31. It is December 31, 2015, and all of the 2015 entries have been made, except the following adjusting entries: a. On September 1, 2015, Zumra...
-
Return on Investment, Effect of Depreciation The Chief Operating Officer of the Wisconsin Corporation is considering the effect of depreciation on company ROI. In the most recent year, net operating...
-
Ramiro & Sons buys T-shirts in bulk, applies its own trendsetting silk-screen designs, and then sells the T-shirts to a number of retailers. Ramiro wants to be known for its trendsetting designs, and...
-
Cullumber Tax Services Ltd. prepares tax returns for corporations and individuals. Having identified its activity cost pools and the cost drivers for each pool, Cullumber accumulated the following...
-
Why is there a trend toward giving an increasing fraction of chip area to cache memory?
-
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...
-
The internal rate of return method is used by Leach Construction Co. in analyzing a capital expenditure proposal that involves an investment of $400,125 and annual net cash flows of $75,000 for each...
-
Calculate the future value of an ordinary annuity that pays $2,350 at 6% for 6 years. It also determines the future value if this were a prepaid annuity. (6 points) 12. Mr. Del Valle is 54 years old...
-
Write a single-line shell command that outputs the words in /usr/share/dict/words that begin with an uppercase A or an uppercase E, followed by any two characters, followed by a lowercase b, and...
-
Imagine that you got the course Business essentials done. Reflective writing helps you make personal sense out of the rich, complex, and confusing information you are learning, ideas you are...
-
Now that we've covered sensationalism and denialism in science media coverage, please find a recent popular science news article that is sensationalized or denialist. Your post should be 100-150...
-
The following relates to Douglas Co. a manufacturer Below are account balances for the year ended 12/31/21 Selling expense $68,000 Rent expense - Factory 18,000 Raw materials purchases 218,000 Other...
-
A uniform shaft, supported at \(x=0\) and rotating at an angular velocity \(\omega\), is suddenly stopped at the end \(x=0\). If the end \(x=l\) is free, determine the subsequent angular displacement...
-
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?
-
Question 38 (2.5 points) Given the following information, calculate the annual depreciation for year 1. The purchase price is $1,250,000 for the office building. Acquisition fee is 2% of the purchase...
-
According to Russell, the practical man values enlargement of the self. True O False
-
What happens to the price of both premium bonds and discount bonds as time progresses? They both decline in value They both converge on par as maturity approaches They both have unpredictable price...
Study smarter with the SolutionInn App