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Mitsi Inventory Systems, Inc., has announced a rights offer. The company has announced that it will take five rights to buy a new share in the offering at a subscription price of $25. At the close of business the day before the ex-rights day, the company’s stock sells for $55 per share. The next morning, you notice that the stock sells for $45 per share and the rights sell for $3 each.
A) What price should the stock sell for ex-rights? (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16)
B) What is the amount of instant profit you can make on ex rights day per new share? (Do not round intermediate calculations.)
Conch Republic Electronics is a midsized electronics manufacturer located in Key West, Florida. The company president is Shelley Couts, who inherited the company. When it was founded over 70 years ago, the company originally repaired radios and other..
Friendly’s Quick Loans, Inc., offers you $6.50 today but you must repay $8.35 when you get your pay check in one week (or else). What is the effective annual return Friendly’s earns on this lending business?
Assume the spot exchange rate between South Korean Won (?) and Japanese Yen (¥) at 9.4 ?/¥, the spot exchange rate between Thai Bhat and Yen is 3.3 ¥/Bhat and that you can buy or sell either currency at the quoted exchange rate (zero bid-offer spread..
Locate the Treasury issue in Figure 7.4 maturing in November 2028. Assume a par value of $10,000. What is its coupon rate? What is its bid price in dollars? What was the previous day’s asked price in dollars?
What is the value of a perpetuity that pays $100 every 6 months forever? The discount rate quoted on an APR basis is 6.5%.
When do you think the firm should consider financing a new project with high-coupon bond vs. low-coupon bond? The factors you could consider could include (but not limited to): external capital market conditions, central bank policies, and firm chara..
You and your spouse are in good health and have reasonably secure careers. Each of you makes about $40,000 annually. You own a home with an $80,000 mortgage, and you owe $15,000 on car loans, $5,000 on personal debts, and $4,000 on credit card loans...
Many states prohibited bank branching because of all of the following except:
Dillard Co. issued $20,000,000 of 5-year, 14% callable bonds on April 1, 2014, at a market rate of 12%. Interest is payable semi-annually on September 30 and March 31. Record the entry for the issuance of the bonds. Record the entries for interest pa..
A common stock pays a current dividend of 1 dollar, the dividend is expected to grow at a 7% annual rate for the next three years; then is will grow at 5 percent in perpetuity. The appropriate discount rate is 10 percent. What is the price of this st..
In the Industrial Supply Company example (Table 4.4) it was assumed that the company’s fixed assets were being used at nearly full capacity and that net fixed assets would have to increase proportionately as sales increased.
A firm grants credit with terms of 2/10, net 40. The firm's customers have ___ days to pay in order to receive a _____ percent discount. Which one of the following is the need to hold cash simply as a financial reserve? Which one of the following wou..
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