What is the percentage of underwriting spread per bond

Assignment Help Financial Management
Reference no: EM132060668

The Wrigley Corporation needs to raise $26 million. The investment banking firm of Tinkers. Evers & Chance will handle the transaction.

a. If stock is utilized. 2, 200,000 shares will be sold to the public at $14.20 per share. The corporation will receive a net price of $12.00 per share. What is the percentage underwriting spread per share?

b. If bonds are utilized, slightly over 26, 400 bonds will be sold to the public at $1,002 per bond. The corporation will receive a net price of $993 per bond. What is the percentage of underwriting spread per bond?

c. Which alternative has the larger percentage of spread? Stock Bond c. Is this the normal relationship between the two types of issues?

Yes

No

Reference no: EM132060668

Questions Cloud

Discuss the various sources of equity capital available : What is a financing mix? What are the two options available to engineering firms for financing the projects?
What is the energy in joules released by the fission : What is the energy in joules released by the fission of a single uranium-235 atom?
Find the initial margin and mainatinance margin : Find the initial margin and mainatinance margin from the CME website.
Solution to reach a stable pink end point : A 1.787 g sample containing some Fe+2 ion requires 31.50 ml of a 0.02188 m K MNO4 solution to reach a stable pink end point.
What is the percentage of underwriting spread per bond : The corporation will receive a net price of $993 per bond. What is the percentage of underwriting spread per bond?
How many moles of agcl can she make : Mirela has 3.8 moles of CaCl2 and 7.6 moles of AgNO3. How many moles of AgCl can she make?
What is the average percentage by volume of ethanol : What is the average percentage by volume of ethanol for this batch?
Define induction and deduction as ways of knowing : How did Berkeley and Hume interpret their respective philosophies? How does feminine epistemology differ from Berkeley and Hume?
How much do you pay every month : You borrow the remaining at an APR of 12% semi-annually compounded, to be repaid in monthly installements for the next 25 years.

Reviews

Write a Review

Financial Management Questions & Answers

  Internal rate of return to rank two mutually projects

Under what conditions should you use internal rate of return (IRR) to rank two mutually exclusive projects?

  At what market price will the bond sell

A five-year corporate bond with a face value of $10,000 pays interest at a coupon rate of 4.0%. At what market price will the bond sell?

  Calculate the WACC of WTC

calculate the WACC of WTC.

  Qualifies for three-year macrs depreciation

The Summit Petroleum Corporation will purchase an asset that qualifies for three-year MACRS depreciation. Calculate the net present value.

  Achieve the desired markup percentage

what markup percentage must now be obtained on the balance of the purchases in order to achieve the desired markup percentage?

  What would be the percentage change in bond value

Assume you purchased a Stations Casino, Inc. bond one year ago for $829.73 when the market rate of interest was 10%. This bond matures in 19 years and is contracted to pay a annual coupons at the rate of 8%. If the current market rate of interest is ..

  Firm cost of common equity using the capm approach

what is its cost of common equity? what will be the firm's cost of common equity using the CAPM approach?

  Calculate the rate of return on stock purchased

Calculate the rate of return on a stock purchased for $12.00 per share at the beginning of the year, with a dividend of $0.15 per share paid during the year, and the price per share of the stock at the end of the year was $13.50.

  Cease paying dividends forever

Gruber Corp. pays a constant $8.00 dividend on its stock. The company will maintain this dividend for the next 11 years and will then cease paying dividends forever. If the required return on this stock is 10 percent, what is the current share price?

  Prepare the journal entry to record intrest on december

On January 1, 2016, Bishop Company issued 10% bonds dated January 1, 2016 with a ace amount of 1,000,000. The bonds mature in 2020 (5 years).

  Which of these two alternatives is a better financing deal

If you decide to take the rebate (cash allowance), your local bank has agreed to finance the balance for 60 months at an annual rate of 5.5%

  Assume debt proceeds are used to repurchase equity

Neal Enterprises has no debt. Its current total value is $74 million. Assume debt proceeds are used to repurchase equity. Ignoring taxes, what will the company’s value be if it sells $34 million in debt? Suppose now that the company’s tax rate is 35 ..

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