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mamaluj [8]
2 years ago
3

The Beach Company has a stock price of $30.00 and the company needs to raise $30 million in common stock. Underwriter's informed

the company's management that the new issue to the public must be priced at $27.00 because of signaling effects. The underwriters' compensation (flotation expense) for the new stock issue will be 7% of the issue price. In addition to the underwriters' fee, The Beach Company will incur underwriting expenses of $200,000 for the new issue. How many shares must the firm sell to net $30 million for the company after underwriting and flotation expenses (rounded to the nearest whole share)?
Business
1 answer:
charle [14.2K]2 years ago
4 0

Answer:

$1,202,708.08 shares

Explanation:

As mention in the question

Incur underwriting expenses = $200,000

The price of issue =$27.

also the is 7% of the  price of the issue.

So the underwriter's expenses per sharing can be determined by

price \  of \   issue *  underwriters' \ compensation\\ =27* 7\%

=$189%

=$1.89

proceeding from the share after the commission can be determined by

=$277 - $1.89

= $25.11

The company will incur the $200,000 of the extra underwriting expense. So the company needs the net proceeds of the $30 million.

So total underwriter's commission is=

30,000,000+200,000

=  $30,200,000.

Therefore the net share can be determined by the

=  \frac{Total \ underwriting\  expenses }{underwriter's \ compensation \  per \ share}

=\frac{30,200,000.}{25.11}

=$1,202,708.08 shares

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Answer:

c) enrichment.

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2 years ago
Short Corporation acquired Hathaway, Inc., for $52,000,000. The fair value of all Hathaway's identifiable tangible and intangibl
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Answer:

correct option is a $0

Explanation:

given data

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Fair value assets = $48,000,000

to find out

What is the annual amortization of goodwill for this acquisition

solution

we know that annual amortization of goodwill on a straight line basis over 40 years before 2001

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4 0
2 years ago
The CEO/chairman of PharmaPacifica was recently killed in an airplane crash. This tragedy has thrown PharmaPacifica into turmoil
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Answer:

A failure or lack of succession management

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Due to the limitation of land and water resources on planet earth, biotechnology can help to increase the crop yields to meet hu
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2 years ago
Jill bought a house 3 years ago and paid $175,000 for it and spent $7,000 in closing costs. Since, then she has made several imp
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Answer:

$88,000

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