Bankers one time net cost inclusive of all the fees

Assignment Help Financial Management
Reference no: EM131993244

A new enterprise after struggling for a few years has finally become a viable candidate for an IPO. The investment bankers with the aid of the management forecast net earnings after taxes (net income) of $30,000, $40,000, 50,000, and $60,000 for each of the next four years. Depreciation is estimated to be $3,000, $3,500, $4,000, and $4,500 in each of the next four years. The tax rate is 35%. The firms in the industry were compiled and those closest to the firm were isolated and their average beta of 1.5 was considered as the best estimate for the firm. The risk-free rate is 4% and the return on market averages 12%. The bankers after considerable thought decided on an annual rate of 5% beyond year 4. The bankers one time net cost inclusive of all the fees and concessions is estimated to be around 5% of the value of the firm.

How many shares will be issued if the bankers set the price at $10 per share?

Reference no: EM131993244

Questions Cloud

Dealt with in ancient greco-roman myths : How are matriarchy and patriarchy dealt with in ancient Greco-Roman myths?
The value of the short position : You are bearish on Telecom and decide to sell short 150 shares at the current market rate of $65 per share.
Consideration by all scholarship programs : In the box below, briefly explain your reasons for submitting this application. Discuss each of the following topics:
Explore the web page of an organization : For this week's post, please identify and explore the web page of an organization that is 'working on' the issue or connected to the community.
Bankers one time net cost inclusive of all the fees : The bankers one time net cost inclusive of all the fees and concessions is estimated to be around 5% of the value of the firm.
Write your response by giving a chronological account : Write your response by giving a chronological account (time based) of your reactions, referencing the specific time segments that I list below.
Determine what affect a sales volume increase : Determine what affect a sales volume increase or decrease will have on unit fixed cost, unit variable cost, total fixed cost, and total variable cost
Performing abortions as part of a medical practice : How would you discuss abortion with a non-Christian who is involved in performing abortions as part of a medical practice?
Calculate firm after tax profit if the economy is strong : Calculate Firm A's after tax profit if the economy is strong.

Reviews

Write a Review

Financial Management Questions & Answers

  What was your total return for last year

You bought a share of 5.5 percent preferred stock for $104.18 last year. The market price for your stock is now $102.67. What was your total return for last year?

  What is equivalent annualized rate of return

The total return on an investment over a five year period is 65%. What is the equivalent annualized rate of return?

  Should wade accept an offer paying

If Wade’s boss requires an 8% interest rate, should Wade accept the offer? Should Wade accept an offer paying $11,000 per year for 6 years?

  Special handling device for the manufacture of food

A special handling device for the manufacture of food is placed in service. It costs $30,000 and has a salvage value of $2,000 after a useful life of 5 years. The device generates a savings of $14,000 per year. Corporate income taxes are 40 percent. ..

  What was the semi-annual current yield

The City of Ames issued a new series of bonds on Jan 1, 2009. The bonds were sold at par ($1,000), have a 3.5% annual coupon rate and mature in 10 years, on Jan 1, 2019. Coupon interest payments are made semi-annually (on June 30 and December 31). Wh..

  What is the conversion premium per share

A 20 year corporate bond has a coupon rate of 9% paid semi annually, a par value of $1000 and a quoted price of 102. If the bond is convertible into 25 shares of common stock with a current market price per share of $30, what is the conversion premiu..

  Nventory conversion period

Data on Shin Inc. for 2008 are shown below, along with the inventory conversion period (ICP) of the firms against which it benchmarks. The firm's new CFO believes that the company could reduce its inventory enough to reduce its ICP to the benchmarks’..

  What is net economic gain or loss on entire option portfolio

What is the net economic gain or loss on the entire option portfolio?

  How are the interest factors in exhibit developed

How are the interest factors (IFs) in Exhibit developed? How may financial calculators be used to calculate interest factors in Exhibit?

  Net present value of this investment given your expectations

Top Shelf Industries is considering remodeling a building that it leases to a retail store. The remodeling costs are estimated at $2.15 million. If it proceeds with the remodeling, the tenant has agreed to pay an additional $750,000 a year in rent fo..

  Find approximate coupon rate that needs to be assigned

Carolina issued a 15-year semi-annual non-callable bond four years ago. find approximate coupon rate that needs to be assigned to the note.

  Determine profit loss per contract ignoring transaction cost

When this position was closed out, the quoted price was 93.90. - Determine the profit or loss per contract, ignoring transaction costs.

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