Reference no: EM132006015
1. Milano Industries needs to raise $168,210,000 in an equity offering. Milano’s current stock price is $80. The underwriter says the issue must be underpriced by 5.0%. The underwriters require a spread of $9.25/share. How many shares must the company sell?
a. 3,000,000.
b. 2,520,000.
c. 1,682,100.
d. 1,500,000.
2. Boss Srores, Inc. had equity of $451.20 million at the beginning of the year. At the end of the year, the company had total assets of $211.03. During the year, the company sold no new equity. Net income for the year was $12.23 million and dividends were $0.69 million. What is Boss's sustainable growth rate?
a. 5.47 percent.
b. 2.56 percent.
c. 2.71 percent.
d. 5.58 percent.
e. 5.64 percent.
3. What does the credit term “5/15 net 45” (5 percent/15 net 45 days) mean?
a. Clients can opt to either receive a 5 percent discount for payment to a vendor within 5 days, a 15 percent discount within 15 days or pay the full amount in 45 days.
b. Clients can opt to either receive a 5 percent discount for payment to a vendor within 15 days or pay the full amount in 45 days.
c. Clients can opt to either receive a 15 percent discount for payment to a vendor within 5 days or pay the full amount in 45 days.
d. Clients can opt to either receive a 10 percent discount for payment to a vendor within 15 days or pay the full amount in 45 days.
4. Carbon8 Corporation wants to raise $164,150,000 in a seasoned equity offering, net of all fees. Carbon8 stock currently sells for $40.00 per share. The underwriters will require a fee of $4.50 per share, and indicate that the issue must be underpriced by 5.0%. How many shares must Carbon8 sell in order to raise the desired amount of capital?
a. 4.3 million.
b. 4.5 million.
c. 4.6 million.
d. 4.9 million.