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Western Airline has decided to raise $5M in new equity by means of a rights offering. They have decided to issue 50,000 new shares. The stock currently sells for a rights-on price of $150 per share. If the ex-rights price is expected to be $133.33 per share, answer the following questions assuming all the rights are exercised unless otherwise stated. (a) What is the issue price? (b) How many shares are currently outstanding (before the rights issue)? (c) What percentage of the rights were actually exercised if the ex-rights price turns out to be $135.71? (d) Suppose the firm anticipates that 30% of the rights will not be exercised. What should the issue price be if the other issue terms stay the same and the firm wants to raise the same amount of money?
Brown Enterprises’ bonds has YTM of 8.5%. They have a 9-year maturity, an annual coupon of 8%, and a par value of $1,000. What is their current yield (i.e., annual coupon payment/ price of bond.
REH Corporation's most recent dividend was $2.42 per share, its expected annual rate of divident growth is 5%, and the required return is now 15%. A variety of proposals are being considered by management to redirect the firm's activities. Determine ..
A 5.55 percent coupon bond with ten years left to maturity is priced to offer a 7.0 percent yield to maturity. You believe that in one year, the yield to maturity will be 6.0 percent. What is the change in price the bond will experience in dollars?
Jim and Alice Lange employess at Walmart have put themselves on a strict budget. There goal at the years end is to buy a boat for $20,000 in cash. Their budget includes the following 41% food and lodging 14% entertainment 10% educational Jim earns $2..
Estimate the current cost of capital for PetSmart.- Assuming that all of the existing debt gets refinanced at this new rate, estimate the value per share after this transaction.
What is the Monthly Mortgage Payment for a 15-yr fixed rate mortgage with an interest rate of 3.00%, 1 point and $2000 in fees on a home with a value of $225,000 and an LTV of 93%?
Suppose that today’s date is April 15. A bond with a 9% coupon paid semiannually every January 15 and July 15 is listed in The Wall Street Journal as selling at an ask price of 1,020.000. If you buy the bond from a dealer today, what price will you p..
1) If the APR is 15 percent, what is the effective annual interest rate (EAR), in percent, if the compounding is monthly? Sharon Kabana won the state lottery and will receive a payment of $89,729.45 at the end of each year for the next 20 years. If t..
Dinklage Corp. has 7 million shares of common stock outstanding. The current share price is $79, and the book value per share is $6. The company also has two bond issues outstanding. The first bond issue has a face value of $70 million, a coupon rate..
Calculate the PV of an annuity due, given the following information: (Extension Population Growth): If the current population of city X is 1,000,000 citizens, how long would it take for the city to reach 2,000,000 citizens if the growth rate was 5%?
You must have a corporation or LLC business structure to be a “Brokerage” and hold a real estate broker license. Regulation and oversight of real estate activities in Minnesota is done by the Commissioner of Commerce. The State of Minnesota does not ..
The accountant uses significant judgment in the valuation of assets. How does the accountant use estimates and judgment in the valuation of long-term assets? Is it ethical for an accountant to use estimates and varying methodology to achieve desired ..
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