Reference no: EM132962540

Questions -

Q1)  Deluxe Furnishings, Inc. is planning to offer its stock to the general public in an Initial Public Offering (IPO). Deluxe Furnishings has hired the Stanton Security Advisers investment banking firm to represent it in this IPO process. Assume that Stanton Security offers the stock of Deluxe Furnishings to the general public for $45.00 per share. However, at the conclusion of trading on the stock market on the first day of this IPO, the closing price per share for Deluxe Furnishings' stock was $52.50. On this first trading day, 550,000 shares of Deluxe Furnishings' stock was sold. Based on this information, calculate the amount of "lost" proceeds on this first day of the Deluxe Furnishings' IPO.

Q2. Thompson Trucking has "Depreciation Expense" of $39,000 on its owned gravel trucks during the most recent fiscal year. The firm's effective tax rate was 27%. Calculate the value of the "depreciation tax shield" that this $39,000 "Depreciation Expense" deduction provides for Thompson Trucking.

Q3. Nationwide Bakers, Inc. obtained a long-term loan from Security State Bank to purchase new conveyors for its production facilities. The interest rate on this loan is 10%. Nationwide Bakers has a 31% effective tax rate. Calculate the after-tax cost of this bank loan to Nationwide Bakers.