Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please show work so i can understand how to do it :) Diction Publishing estimates that it needs $500,000 to support its expected growth. The

please show work so i can understand how to do it :)
image text in transcribed
Diction Publishing estimates that it needs $500,000 to support its expected growth. The underwriting fees charged by the investment banking firm for which you work are 6.5% for such issue sizes. In addition, it is estimated that Diction will incur 54,900 in other expenses related to the IPO. If your analysis indicates that Diction's stock can be sold for S40 per share, how many shares must a. be issued to me the company the $500,000 it needs? -(500,000 +4,900)/(-0.065) = 504,900/0.935 -540,000 540,000 / 40 S per share -13,500 shares C b Suppose that Diction's investment banker charges 10% rather than 6.5%. Assuming that all other information given earlier is the same, bow many shares must Diction issue in this situation to net the company the $500,000 it needs? -- (500,000 +4,900)/(1-10%) Suppose that Diction's investment banker charges 8.2% rather than 6.5%. Assuming that all other information given carlier is the same, how many shares must Diction issue in this situation to ne the compny the $500,000 it needs? d. Suppose everything is the same as originally presented, except Diction will incur 85,835 in other expenses rather than $4.900. In this situation, how many shares must Diction issue to set the company the $500,000 it needs? , 20 While CFN Now suppose that Diction decides it only needs $450.000 to support its growth. to this case, its investment banker charges 7% flotation costs, and Diction will incur only $3.840 in other cups How many shares must Diction issue to set the company the $450,000 itecedo

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Finance questions