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After a banner year of rising profits and positive stock returns, the managers of Raptor Pharmaceuticals Corporation (RPC) have decided to launch a seasoned equity
After a banner year of rising profits and positive stock returns, the managers of Raptor Pharmaceuticals Corporation (RPC) have decided to launch a seasoned equity offering to raise new equity capital. RPC currently has 20 million shares outstanding, and yesterday's closing market price was $80.00 per RPC share. The company plans to sell 2 million newly issued shares in its seasoned offering. The investment banking firm Robbum and Blindum (R&B) has agreed to underwrite the new stock issue for a 2.5% discount from the offering price, which RPC and R&B have agreed should be $1.60 per share lower than RPC's closing price the day before the offering is sold. a) Assuming that RPC's stock price closes at $77.60 per share the day before the seasoned offering is launched, what net proceeds will RPC receive from this offering? $ b) Calculate the return earned by RPC's existing stockholders on their shares from the time before the seasoned offering was announced until it was actually sold for $77.60 per share. Round your answer to two decimal places. c) Calculate the total cost of the seasoned equity offering to RPC's existing stockholders as a percentage of the offering proceeds. Round your answer to two decimal places. Please show how you arrived at the
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