A firm has decided to go public by selling 10000000 of new

Reference no: EM13385870

A firm has decided to go public by selling $10,000,000 of new common stock. Its investment bankers agreed to take a smaller fee now (7% of gross proceeds versus their normal 12%) in exchange for a 1-year option to purchase an additional 300,000 shares at $5.00 per share. The investment bankers expect to exercise the option and purchase the 300,000 shares in exactly one year, when the stock price is fore-casted to be $4.50 per share. However, there is a chance that the stock price will actually be $10.00 per share one year from now. If the $10 price occurs, what would the present value of the entire underwriting compensation be? Assume that the investment banker's required return on such arrangements is 18%.?

Reference no: EM13385870

Questions Cloud

When 16768 g of an organic iron compound containing fe c h : when 1.6768 g of an organic iron compound containing fe c h and o was burned in o2 3.1363 g of co2 and 0.89758 g of h2o

The second-order reaction 2 mnco5 mn2co10 has a rate : the second-order reaction 2 mnco5 mn2co10 has a rate constant equal to 3.0 x 109 m-1s-1 at 25degc. if the initial

A compound with the empirical formula ch2o was found to : a compound with the empirical formula ch2o was found to have a molar mass between 89 and 91 g. what is the molecular

On a recent autumn day the consentration of carbon monoxide : on a recent autumn day the consentration of carbon monoxide in the air in downtown denver co. reached 3.0 x 10 2 ppmv.

A firm has decided to go public by selling 10000000 of new : a firm has decided to go public by selling 10000000 of new common stock. its investment bankers agreed to take a

A physician wrote a prescription for tylenolreg 325 mg5 ml : a physician wrote a prescription for tylenolreg 325 mg5 ml with codeine 10 mg5 ml liquid 5 ml three times a day x 4

If you were to prepare a 100 solution of beginning with : if you were to prepare a 1.00 solution of beginning with water at 27.5 what would the final temperature of the solution

What are the fundamental similarity and difference gap and : what are the fundamental similarity and difference gap and dgap?gap earning sensitivity analysis dgap market value of

The pka of benzoic acid and 4-nitroanilinium hydrochloride : the pka of benzoic acid and 4-nitroanilinium hydrochloride are 4.2 and 1.0 respectively.a. determine the keq for the

User Account

All Pages