Stockholders will be allowed to buy one new share for every

Assignment Help Finance Basics
Reference no: EM13479941

The Lagrange Point Co. has proposed a rights offering. The stock currently sells for $40 per share. Under the terms of the offer, stockholders will be allowed to buy one new share for every five that they own at a price of $25 per share. What is the value of a right? What is the ex-rights price? You can buy five rights on shares for 5 ×$40 =$200 and then exercise the rights for another $25. Your total investment is $225, and you end up with six ex-rights shares. The ex- rights price per share is $225/6=$37.50. The rights are thus worth $40 -37.50=$2.50 apiece.

Reference no: EM13479941

Questions Cloud

Achange from the completed-contract method to the : various types of accounting changes can affect the financial statements of a business enterprise differently. assume
The company is seeking 135 million in additional funds : calvini shoe co. has concluded that additional equity financing will be needed to expand operations and that the
Applying the theory of constraintsexplain why your : applying the theory of constraints.explain why your organization does not have unlimited resources space inventory
Earnings are expected to continue to grow at the same : cost of equity the common stock for the bestsold corporation sells for s58. if a new issue is sold the flotation costs
Stockholders will be allowed to buy one new share for every : the lagrange point co. has proposed a rights offering. the stock currently sells for 40 per share. under the terms of
Pathos cos common stock is currently selling for s2380 : cost of internal equity pathos co.s common stock is currently selling for s23.80. dividends paid last year were 0.70.
Describe three issuesproblems that a company could : describe three issuesproblems that a company could encounter when trying to determine the actual cost of a good or
Cost of preferred stork your firm is planning to issue : cost of preferred stork your firm is planning to issue preferred stock. the stock sells for 115 however if new stock is
Cost of debt the zephyr corporation is contemplating a new : cost of debt the zephyr corporation is contemplating a new investment to be financed 33 percent from debt. the firm

Reviews

Write a Review

Finance Basics Questions & Answers

  What was its depreciation and amortization expense

Sosa Corporation recently reported an EBITDA of $31.9 million and net income of $9.7 million. The company had $6.8 million in interest expense, and its corporate tax rate was 35 percent. What was its depreciation and amortization expense?

  Determine dollar return

Suppose that IBM stock is selling for $110 per share and that you short sell 200 shares of the stock determine your dollar return if the price of IBM stock drops to $95 per share?

  Compute projects payback period

Suppose your employer, hates the company's current telephone system. By investing $60,000 in a new phone system, he thinks that he can improve revenue through fewer misdirected sales inquiry calls,

  What rate of return is built into the annuity

You just won the state lottery, and you have a choice between receiving $3,500,000 today or a 10-year annuity of $500,000, with the first payment coming one year from today. What rate of return is built into the annuity?

  What must the coupon rate be on these bonds

Ponzi Corporation has bonds on the market with 12.5 years to maturity, a YTM of 7.30 percent, and a current price of $1,057. The bonds make semiannual payments. What must the coupon rate be on these bonds?

  What is the value per share of your firm stock

after which growth should be at a constant rate of 6%. The last dividend paid was $1.00. What is the value Per share of your firm's stock?

  Retirement planning case

THE CASE - LEONARD AND ROSE DOMINO,  Retirement Planning Case assignment.  You must clearly state assumptions in your final report in your final report to the clients.   Use generic rates throughout your analysis and refer to the OMERS defined ben..

  Suppose we are analyzing firm x firm x is financed with

suppose we are analyzing firm x. firm x is financed with both equity and debt and will exist for only one year. if the

  Calculate the real rate of return on the stock

You purchased 200 shares of stock for $23 per share exactly one year ago. During the year, the stock paid a $1.10 dividend per share and the current stock price is $18 per share. The inflation rate the last year was 2%.

  Present value-interest and time value of money

What single payment could be made at beginning of first year to achieve this objective? What amount could you pay at the end of each year annually for 10 years to achieve this same objective.

  What would the annual interest rate from the company

A payday loan company charges 4 percent interest for a two week period. What would the annual interest rate from the company.

  The current spot price of platinum is 1500 in us dollars

the current spot price of platinum is 1500 in us dollars per troy ounce. assume a continuously compounded risk-free

Free Assignment Quote

Assured A++ Grade

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!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd