Compute the flotation cost

Assignment Help Finance Basics

Reference no: EM13293270

Eagle Sports Products (ESP) is considering issuing debt to raise funds to finance its growth during the next few years. The amount of the issue will be between $35 million and $40 million. ESP has already arranged for a local investment banker to handle the debt issue. The arrangement calls for ESP to pay flotation costs equal to 7 percent of the total market value of hte issue.

a. compute the flotation costs that ESP will have to pay if the market value of hte debt issue is $39 million
b. If the debt issue has a market value of $39 million, how much will ESP be able to use for its financing needs? That is, what will be the net proceeds from the issue for ESP? assume that the only costs associated with the issue are those paid to the investment banker.
c. If the company needs $39 million to finance its future growth, how much debt must ESP issue?

Reference no: EM13293270

Questions Cloud

An overview of merger and acquisition : The project will provide an overview of Merger and Acquisition, valuation methods, insight on deal design, how to finance the M&A deal, considerations of capital structure such as debt and equity, in addition to terms of exchange.

Determine what are the influences of isi on tdm schemes : name several methods for ISI mitigration. How does ISIdepend on the carrier frequancy, symbol rate, and movement ofsender/receiver what are the influences of ISI on TDM schemes

Explain pure distilled water that has been fully degassed : You make 10-4 M solutions of NaOH and NaHCO3 and a 10-4.3 M solution of Na2CO3. You use pure distilled water that has been fully degassed.

Determine the ratio of the flow speeds : A Venturi meter measures fluid speed in a pipe. A constriction (of cross-sectional area A2) is put in a pipe of normal cross-sectional area A1 (A1 = 2A2). Find the ratio of the flow speeds

Compute the flotation cost : Eagle Sports Products (ESP) is considering issuing debt to raise funds to finance its growth during the next few years. The amount of the issue will be between $35 million and $40 million.

What is the difference between psk and qpsk : Consider a cellular phone transmits data using QPSK with achannel rate of 50 Kbps, (a) what is the data rate provided (b)What is the difference between PSK and QPSK.

The ph after the solutions equilibrate with the atmosphere : In the lab you make 10-5.5 M solutions of HCl and of NaOH using pure distilled deionized water. What would be the pH after the solutions equilibrate with the atmosphere

What is the electrons orbital frequency : In a classical model of the hydrogen atom, the electron moves around the proton in a circular orbit of radius 0.053 nm. What is the electron's orbital frequency

What is the expected cash flow from operations : If this company belonged to you, would you prefer that Congress increase or decrease the depreciation expense allowed your company? explain why?

User Account

All Pages