Reference no: EM1362068

ABC needs to raise $50 Million by issuing common stock in an IPO. ABC will use the proceeds to pay down 8% coupon debt. ABC right now has 20 million shares outstanding representing a book equity interest of 200 million. The IPO will be priced at a 2007 P/E multiple of 20.0x.

The following pre-offering financial information is available for ABC(in MM):
Pre offering net debt 250
Offering proceeds (50)
Pro forma Net Debt 200

2007 projected
Sales 500
EBITDA 63
Net Income 22

Tax rate 40%

Question 12: (5 pts) Calculate the post deal equity value of XYZ using 2007 pro forma net income as the valuation benchmark?
a: $488.0 million
b: $520.0 million
c: $440.0 million
d: None of the above
Question 14: (5 pts) Using the answer from 12, calculate the percent of the company that must be sold to raise $50 million?
a: 10.25%
b: 9.62%
c: 11.36%
d: None of the above

Question 15: (5 pts) Using the answer from 14, calculate the number of shares you need to sell to raise $50 million?
a: 2.05 million
b: 1.92 million
c: 2.27 million
d: None of the above

Question 16: (5 pts) Calculate the dilution in net tangible book value per share to new investors?
a: $5.00
b: $10.67
c: $3.25
d: $6.75