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Hello, I need help with Managerial Finance please. 1. Calculate the number of shares issued through this IPO. Louisiana Timber Company currently has 2 million
Hello, I need help with Managerial Finance please.
1. Calculate the number of shares issued through this IPO. Louisiana Timber Company currently has 2 million shares of stock outstanding and will report earnings of $6.79 million in the current year. The company is considering the issuance of 1 million additional shares that will net $39 per share to the corporation. 2- a. What is the immediate dilution potential for this new stock issue? (Do not round intermediate calculations and round your answer to 2 decimal places.) b-1. Assume the Louisiana Timber Company can earn 12.60 percent on the proceeds of the stock issue in time to include it in the current year's results. Calculate earnings per share. (Do not round intermediate calculations and round your answer to 2 decimal places.) Jordan Broadcasting Company is going public at $44 net per share to the company. There also are founding stockholders that are selling part of their shares at the same price. Prior to the offering, the firm had $27 million in earnings divided over 9 million shares. The public offering will be for 5 million shares; 4 million will be new corporate shares and 1 million will be shares currently owned by the founding stockholders. 3-a. What is the immediate dilution based on the new corporate shares that are being offered? (Do not round intermediate calculations and round your answer to 2 decimal places. 3-b. If the stock has a P/E of 25 immediately after the offering, what will the stock price be? (Do not round intermediate calculations and round your answer to 2 decimal places.) Richmond Rent-A-Car is about to go public. The investment banking firm of Tinkers, Evers & Chance is attempting to price the issue. The car rental industry generally trades at a 15 percent discount below the P/E ratio on the Standard & Poor's 500 Stock Index. Assume that index currently has a P/E ratio of 20. The firm can be compared to the car rental industry as follows: Growth rate in earnings per share Consistency of performance Debt to total assets Turnover of product Quality of management Richmond 16% Increased earnings 4 out of 5 years 32% Slightly below average High Car Rental Industry 10% Increased earnings 3 out of 5 years 40% Average Average 4. Assume, in assessing the initial P/E ratio, the investment banker will first determine the appropriate industry P/E based on the Standard & Poor's 500 Index. Then a .50 point will be added to the P/E ratio for each case in which Richmond Rent-A-Car is superior to the industry norm, and a .50 point will be deducted for an inferior comparison. On this basis, what should the initial P/E be for the firm? (Round your answer to 1 decimal place.) 5. The Pioneer Petroleum Corporation has a bond outstanding with an $60 annual interest payment, a market price of $850, and a maturity date in five years. Assume the par value of the bond is $1,000. Find the following: (Use the approximation formula to compute the approximate yield to maturity and use the calculator method to compute the exact yield to maturity. Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.) 6. Select the correct yield to maturity for each security provision. Higher returns tend to go with greater risk. 7. The Florida Investment Fund buys 76 bonds of the Gator Corporation through a broker. The bonds pay 10 percent annual interest. The yield to maturity (market rate of interest) is 12 percent. The bonds have a 15-year maturity. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. Using an assumption of semiannual interest payments: a. Compute the price of a bond. (Do not round intermediate calculations and round your answer to 2 decimal places.) b. Compute the total value of the 76 bonds. (Do not round intermediate calculations and round your answer to 2 decimal places.) 8. The Deluxe Corporation has just signed a 180-month lease on an asset with a 22-year life. The minimum lease payments are $1,400 per month ($16,800 per year) and are to be discounted back to the present at a 10 percent annual discount rate. The estimated fair value of the property is $170,000. Use Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. Assume the lease is set up as an annual lease. a. Calculate the lease period as a percentage to the estimated life of the leased property. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) b. Calculate the present value of lease payments as a percentage to the fair value of the property. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)Step by Step Solution
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