Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Oswego Manufacturing Company has decided to sell additional common stock through a rights offering. The company has 50 million shares outstanding and plans to sell an additional 5 million shares through the rights offering. Each shareholder will receive one right for each share currently held, and thus each right will entitle shareholders to purchase 0.1 shares. Oswego's common stock is currently selling at $50 a share, and the subscription price of the rights will be $45 a share.
a. Calculate the formula value of the right for both the rights-on and the ex-rights cases.
b. How much is the market price of the company's stock expected to drop on the exrights date, all other things being equal? Why?
c. If the market price of Oswego's common stock increases to $52 a share, what will the formula value of the right be (rights-on case)?
d. Discuss the trend of the right's market price over its life, assuming the company's common stock continues to trade in the $50 range. (No numerical calculations are necessary for this part of the problem.)
A large retailer obtains merchandise under the credit terms of 1/10, net 40, but routinely takes 65 days to pay its bills. (Because the retailer is an important customer, suppliers allow the firm to stretch its credit terms.) What is the retailer's e..
Suppose you own stock in a company. the current per share is $25. Another company has just announced that it wants to buy your company and will pay $35 per share to acquire all the outstanding stock. your company's management immediately begins fight..
Identify the factors that influence equity pricing. How would you value a stock of a startup company expected to grow dividends rapidly during the years 1-5 before its dividend growth stabilizes?
A 6.05 percent coupon bond with fifteen years left to maturity is priced to offer a 7.1 percent yield to maturity. You believe that in one year, the yield to maturity will be 7.0 percent. What is the change in price the bond will experience in dollar..
The British Pound currently trades for $1.30/pound. You initiated a long straddle on the British pound, using a call option with an excercise price of $1.30 and a premium of $.015 and a put option with the same maturity and excercise price and a prem..
The H.R. Pickett Corp. has $500,000 of interest-bearing debt outstanding, and it pays an annual interest rate of 10%. In addition, it has $700,000 of common stock on its balance sheet. It finances with only debt and common equity, so it has no prefer..
ABC Co. and XYZ Co. are identical firms in all respects except for their capital structure. ABC is all equity financed with $625,000 in stock. XYZ uses both stock and perpetual debt; its stock is worth $312,500 and the interest rate on its debt is 5...
What is the probability that Vargo will have operating losses? How large could the additional fixed costs from the new equipment be without affecting the breakeven point?
Keyser Mining is considering a project that will require the purchase of $980,000 in new equipment. The equipment is in a seven-year MACRS class. The equipment can be scrapped at the end of the project for 5 percent of its original cost. What is the ..
While vacationing in Florida, John Kelley saw the vacation home of his dreams. It was listed with a sale price of $200,000. The only catch is that John is 40 years old and plans to continue working until he is 65. Still, he believes that prices gener..
On January 1, 2002, you borrow $200,000 to buy a house. Your mortgage has an annual percentage rate (A.P.R.) of 7.2% per year (.6% per month), the term of the mortgage is 30 years, and all payments are due at the end of the month. Ignore taxes.
A stock price is currently $100. Over each of the next two six-month periods it is expected to go up by 10% or down by 10%. The risk-free interest rate is 5% per annum with continuous compounding. What is the value of a one-year American put option w..
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd