Red Shoe Co. has concluded that additional equity financing will be needed to expand operations and that the needed funds will be best obtained through a rights offering. It has correctly determined that as a result of the rights offering, the share price will fall from $55 to $51.00 ($55 is the rights-on price; $51.00 is the ex-rights price, also known as the when-issued price). The company is seeking $23 million in additional funds with a per-share subscription price equal to $40.

How many shares are there currently, before the offering? (Assume that the increment to the market value of the equity equals the gross proceeds from the offering.) (Do not round intermediate calculations and round your final answer to nearest whole number, e.g., 32.)

Number of old shares

What is the profit equation for the company : Soumotchka Accessories make customized handbags to order. The price they can charge depends on how many they sell, x, consistent with the expression: What is the profit equation for the company? |

Calculate the bonds default risk premium : Dakota Corporation 15-year bonds have an equilibrium rate of return of 10 percent. For all securities, the inflation risk premium is 1.75 percent and the real risk-free rate is 3.50 percent. The security’s liquidity risk premium is 1.20 percent and m.. |

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The increment to the market value of the equity equals : Red Shoe Co. has concluded that additional equity financing will be needed to expand operations and that the needed funds will be best obtained through a rights offering. Assume that the increment to the market value of the equity equals the gross pr.. |

Equity before the announcement of the debt issue : Green Manufacturing, Inc., plans to announce that it will issue $1.92 million of perpetual debt and use the proceeds to repurchase common stock. The bonds will sell at par with a coupon rate of 6 percent. What is the expected return on Green’s equit.. |

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## Calculating the weighted average cost of capitalWhen calculating the weighted average cost of capital, weights are based on |

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