Description of this paper

Need Assistance With 20 Finance Questions....

Description

Solution


Question

Need Assistance With 20 Finance Questions... - note - I already have this assignment posted on coursehero. I need a tutor that can complete it by the deadline. 1. The Sun Co. and the Moon Co. have both announced IPOs at $52 per share. One of these is undervalued by $15.00, and the other is overvalued by $7.25, but you have no way of knowing which is which. You plan on buying 1,600 shares of each issue. If an issue is underpriced, it will be rationed, and only half your order will be filled. Requirement 1: Assuming you could get 1,600 shares in Sun and 1,600 shares in Moon, what would your profit be? $24,000 $11,600 $12,400 $17,800 $23,200 Requirement 2: What profit do you actually expect? $12,000 $11,600 $400 $12,400 $5,800 Requirement 3: What principle have you illustrated? Winner's curse Prisoner's dilemma Break-even 2. The IBBS Co. needs to raise $65.1 million to finance its expansion into new markets. The company will sell new shares of equity via a general cash offering to raise the needed funds. Required: If the offer price is $51 per share and the company?s underwriters charge an 8.5 percent spread, how many shares need to be sold? 55,737,705 1,176,471 1,395,050 1,276,471 1,335,760 3. The IBBS Co. needs to raise $66.5 million to finance its expansion into new markets. The company will sell new shares of equity via a general cash offering to raise the needed funds. The offer price is $65 per share and the company?s underwriters charge an 9.5 percent spread. Required: If the SEC filing fee and associated administrative expenses of the offering are $465,000, how many shares need to be sold? 1,138,377 1,084,304 1,130,472 1,030,231 108,146 4. The Bostitch Co. has just gone public. Under a firm commitment agreement, Bostitch received $32.40 for each of the 4.14 million shares sold. The initial offering price was $34.80 per share, and the stock rose to $41.80 per share in the first few minutes of trading. Bostitch paid $909,000 in legal and other direct costs and $258,000 in indirect costs. Required: What was the flotation cost as a percentage of funds raised? 15.08% 30.00% 8.16% 30.14% 5. ASP, Inc. needs to raise $43 million to finance its expansion into new markets. The company will sell new shares of equity via a general cash offering to raise the needed funds. The SEC filing fee and associated administrative expenses of the offering are $389,000. If the offer price is $38 per share and the company's underwriters charge a spread of 8 percent, how many shares need to be sold? 1,241,104 shares 1,312,416 shares 1,406,211 shares 1,414,141 shares 1,587,923 shares 21.99% 6. Sherpa Movers has just gone public. Under a firm commitment agreement, the firm received $34.40 for each of the 3.5 million shares sold. The initial offering price was $37 per share, and the stock rose to $43 per share in the first few minutes of trading. Sherpa Movers paid $896,000 in legal and other direct costs and $225,000 in indirect costs. What was the flotation cost as a percentage of the funds raised? 22.91 percent 23.85 percent 24.49 percent 26.17 percent 28.60 percent 7. The Bread Basket needs to raise $38 million to expand its operations nationally. The company will sell new shares of common stock using a general cash offering. The underwriters charge a 7.65 percent spread, the administrative costs are $395,000, and the offer price is $26 per share. How many shares of stock must be sold for The Bread Basket to receive the total funds it desires? 1,599,059 shares 1,638,311 shares 1,647,222 shares 1,814,141 shares 1,833,333 shares 8. Alicia placed an order with her broker to purchase 500 shares of each of three IPOs that are being released this month. Each IPO has an offer price of $16 a share. The number of shares allocated to Alicia along with the closing stock price at the end of the first day of trading for each stock, are as follows: What is Alicia's total profit or loss on these three stocks as of the end of the first day of trading for each stock? -$425 -$260 -$150 $375 $550 9. Wholesale Foods would like to sell 1,500 shares of stock using a Dutch auction. The bids received are as follows: Bidder Quantity Price A 300 $39 B 600 $38 C 900 $36 D 1,100 $35 E 400 $34 What is the total amount the issuer will receive from this auction? Ignore costs. $58,500 $57,000 $56,500 $54,000 $51,000 10. Which one of the following statements is correct? The financial market generally reacts the same to a new issue of equity as it does to a new issue of debt as long as the issuer is the same. Issuing new equity shares is always viewed by the market as a positive event. Informed managers tend to issue new securities when the existing securities are underpriced. A decline in the price of existing stock when a new issue is released is a direct cost of selling securities. A firm's existing shareholders would prefer that new securities be issued when those securities are overpriced rather than underpriced. 11. Phil and Terry started a new business three years ago. Two years ago, they incorporated the business and issued themselves each 20,000 shares of stock. Last year, they took the company public in an initial public offering (IPO) and issued an additional 100,000 shares of stock at that time. The offer price was $14 a share, the spread was 8 percent, and the lockup period was six months. The stock closed at $17 a share at the end of the first day of trading. During the first six months of trading, the stock had a price range of $13 to $23 per share. During the second six months of trading, the stock sold between $15 and $21 per share. Both Tracie and Amy purchased 100 shares at the offer price. Given this, which one of the following statements is correct? Ignore trading costs and taxes. Tracie could have earned a maximum profit of 100($23 - 17) on her investment. Phil could have sold 5,000 shares at $23 per share. The underwriters earned a spread equal to 8 percent of $17. The maximum price at which Terry could have sold shares is $21. Amy paid 108 percent of $14 per share to purchase her 100 shares. 12. Which of the following are true statements? I. Venture capitalists tend to be long-term investors in a firm. II. Venture capital is relatively easy to obtain for most new firms. III. Venture capitalists generally have an exit strategy. IV. Venture capitalists tend to specialize in one type of financing for a select type of firm. I and II only III and IV only I and III only I and IV only II and IV only 13. Merlo, Inc. maintains a debt-equity ratio of 0.40 and follows a residual dividend policy. The company has after-tax earnings of $3,200 for the year and needs $2,800 for new investments. What is the total amount Merlo will pay out in dividends this year? $0 $1,886 $800 $1,200 $286 14. A firm has a market value equal to its book value. Currently, the firm has excess cash of $1,200 and other assets of $10,800. Equity is worth $12,000. The firm has 750 shares of stock outstanding and net income of $775. What will the new earnings per share be if the firm uses its excess cash to complete a stock repurchase? $2.60 $1.15 $1.03 $1.45 $1.78 15. A firm has a market value equal to its book value. Currently, the firm has excess cash of $600 and other assets of $5,800. Equity is worth $6,400. The firm has 800 shares of stock outstanding and net income of $1,550. The firm has decided to spend all of its excess cash on a share repurchase program. How many shares of stock will be outstanding after the stock repurchase is completed? 733 shares 808 shares 741 shares 658 shares 725 shares 16. A firm has a market value equal to its book value. Currently, the firm has excess cash of $9,400 and other assets of $17,600. Equity is worth $27,000. The firm has 550 shares of stock outstanding and net income of $2,200. What will the stock price per share be if the firm pays out its excess cash as a cash dividend? $40 $32 $55 $36 $59 17. Murphy's, Inc. has 60,000 shares of stock outstanding with a par value of $1.00 per share. The market value is $10.00 per share. The balance sheet shows $72,000 in the capital in excess of par account, $60,000 in the common stock account, and $136,500 in the retained earnings account. The firm just announced a 12 percent (small) stock dividend. What will the balance in the capital in excess of par account be after the dividend? $192,000 $144,000 $129,600 $136,800 $71,700 18. Murphy's, Inc. has 32,300 shares of stock outstanding with a par value of $1.00 per share. The market value is $12.00 per share. The balance sheet shows $88,550.00 in the capital in excess of par account, $32,300.00 in the common stock account, and $154,950 in the retained earnings account. The firm just announced a 12 percent (small) stock dividend. What will the market price per share be after the dividend? $11.71 $12.61 $11.61 $10.71 $12.00 19. Robinson's has 30,000 shares of stock outstanding with a par value of $1.00 per share and a market price of $44 a share. The balance sheet shows $30,000 in the common stock account, $440,000 in the paid in surplus account, and $380,000 in the retained earnings account. The firm just announced a 5-for-3 stock split. How many shares of stock will be outstanding after the split? 120,000 shares 49,500 shares 32,000 shares 18,000 shares 50,000 shares 20. You own 480 shares of Abco, Inc. stock. The company has stated that it plans on issuing a dividend of $0.65 a share at the end of this year and then issuing a final liquidating dividend of $3.00 a share at the end of next year. Your required rate of return is 7 percent. Ignoring taxes, what is the value of one share of this stock today? $4.49 $3.58 $3.65 $3.41 $3.23 Please let me know if you have any questions.. I will be online all day and am quick to respond. Each question has the correct answer and 1/5. Please show all work so that I fully understand how to solve the problem correctly. I need this assignment completed ASAP. Thanks you much.

 

Paper#10195 | Written in 18-Jul-2015

Price : $25
SiteLock