Reference no: EM132348595

Question

Rights Offerings

Hickock, Inc., is proposing a rights offering. Presently there are 350,000 shares outstanding at $64 each. There will be 50,000 new shares offered at $58 each.

A.) What is th enew market value of the company?

B.) How many rights are associated with one of

IPO Underpricing

The Woods Co. and the Mickelson Co. have both announced IPOs at $40 per share. One of these is undervalued by $11, and the other is overvalued by $3, but you have no way of knowing which is which. You plan to buy 1,000 shares of each issue. If an issue is underpriced, it will be rationed, and only half your order will be filled. If you could get 1,000 shares in Woods and 1,000 shares in Mickelson, what would your profit be? What profit do you actually expect? What principle have you illustrated?

Calculating Flotation Costs

The Raven Co. has just gone public. Under a firm commitment agreement. Raven received $23.25 for each of the 20 million shares sold. The initial offering price was $25 per share, and the stock rose to $29.32 per share in the few minutes of trading. Raven paid $950,000 in direct legal and other costs and $320,000 in indirect costs. What was the flotation cost as a percentage of funds raised?