Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Red Corporation stock currently sells for $65 per share. There are 6 million shares currently outstanding. The company announces plans to raise $5 million by
Red Corporation stock currently sells for $65 per share. There are 6 million shares currently outstanding. The company announces plans to raise $5 million by offering shares to the public at a price of $65 per share. If the underwriting spread is 6%, how many shares will the company need to issue in order to be left with net proceeds of $5 million? Enter your answer as a whole number not in millions. (For example, 1,000,000 not 1 million.) Shares = 81833 Correct response: 81,833-10 If other administrative costs are $80,000, what is the dollar value of the total direct costs of the issue? Assume that 81,833 shares are issued. Enter your answer as a whole number Direct costs = 399149 Correct response: 399, 149:10 If the share price falls by 5.5 % at the announcement of the plans to proceed with a seasoned offering, what is the dollar cost of the announcement effect to existing shareholders? Enter your answer as a whole number. Total cost = Number
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started