A broker wants to sell a customer an investment costing $$100$ with an expected payoff in one year of $$108\mathrm{.}2.$

The customer indicates that a $8\mathrm{.}2$ percent return is not very attractive. The broker responds by suggesting the

customer borrow $$80$ for one year at $6\mathrm{.}2$ percent interest to help pay for the investment.

a$.$ What is the customer's expected return if she borrows the money?

Note: Round your answer to $1$ decimal place.

Customer's expected return

FARO Technologies, whose products include portable $3D$ measurement equipment, recently had $31$ million

shares outstanding trading at $$35$ a share. Suppose the company announces its intention to raise $$340$ millior

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?

Note: Enter your answer in millions without a sign.

Answer is complete and correct.

Expected loss

$$102$

million

b$.$ What percentage of the value of FARO's existing equity prior to the announcement is this expected loss?

Note: Round your answer to $1$ decimal place.

Answer is complete and correct.

c$.$ At what price should FARO expect its existing shares to sell immediately after the announcement?

Note: Do not round intermediate calculations. Round your answer to $2$ decimal places.

Answer is complete but not entirely correct.