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How large a loss in dollar terms will existing faro

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Reference no: EM132696743

FARO Technologies, whose products include portable 3D measurement equipment, recently had 17 million shares outstanding trading at $35 a share. Supposed the company announces its intention to raise $200 million by selling new shares.

Problem 1: How large a loss in dollar terms will existing FARO shareholders experience on the announcement date, based on studies that show losses are 30% of the size of the new issue?

Problem 2: What percentage of the value of FARO's existing equity prior to the announcement is this expected gain or loss?

Problem 3: At what price should FARO expect its existing shares to sell immediately after the announcement?

Reference no: EM132696743

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