What is the theoretical value of the right

Assignment Help Finance Basics
Reference no: EM132507312

Scott's company decided that they would like to sell more common stock via a rights offering. Scott's company has the following characteristics:

Current # of shares outstanding = 12,000,000 (with an additional 1,500,000 through a rights offering)

Each of Scott's existing shareholders will receive one right for each share currently held. Each right will allow each shareholder to purchase 0.125 shares (for each right held).

Scott's company has done well and its shareprice went from $23 to $50 per share (where it currently trades). The subscription price of the right is $45.

What is the theoretical value of the right using the ex-rights case.

Reference no: EM132507312

Questions Cloud

ENGG 0010 Control and Instrumentation Assignment : ENGG 0010 Control and Instrumentation Assignment Help and Solution - Middle East College, Oman - Assessment Writing Service
Determine contribution margin percentage : Use this information to determine FY 2018 Contribution Margin Percentage. Enter percentage to one decimal place. (example enter 35.5% as 35.5)
Best estimate for the stock price per share : If the company has 10 million shares of stock, what is your best estimate for the stock price per share?
What is the premium over the formula value : The warrants are currently trading in the market for $30/share. What is the premium over the formula value that the warrants are selling for?
What is the theoretical value of the right : Scott's company decided that they would like to sell more common stock via a rights offering. Scott's company has the following characteristics:
Determine the cost of goods sold amounts : Determine the Cost of goods sold, Direct materials cost and Direct labor cost amounts is available for the first year of operations of Creston Inc.
Purchase one share of common stock : Due to issues that they are having internally, they have decided that they need to raise additional capital. They plan on doing this by issuing $100,000,000
Define how the choice to share is impacting others : Think about how shared resources are being exploited and how the choice to share/steal is impacting others. Consider how the behavior of just one, or a couple.
Finance is the science of money management : Finance is the science of money management and involves investing, lending, and borrowing money under conditions of uncertainty and risk.

Reviews

Write a Review

Finance Basics Questions & Answers

  How much should you be willing to pay for the bond

how much should you be willing to pay for the bond? Do not round intermediate steps. Round your answer to the nearest cent.

  Question on foreign exchange and derivatives

Examine the impact of foreign exchange and derivatives markets on Honeywell Inc. and the countries (India and Brazil)in which the Honeywell Inc. is considering expansion.

  What would be the value of the product line

Entrepreneurial Inc. is evaluating a new product launch that will cost it $36267 to launch. The company projects it will generate $622123 in annual operating.

  Calculate the required rate of return for furhman labs

wilson is now evaluating the expected performance of two common stocks furhman labs inc. and garten testing inc. he

  What is the irr for project

Question: If the tax rate is 34 percent, what is the IRR for this project? Note: Please describe comprehensively and provide step by step solution.

  What does the no-arbitrage condition imply about the price

What does the No-Arbitrage Condition imply about the price of a 1-year zero coupon bond with face value $100 (Assume no trading costs.)

  External equity ramifications

What are the advantages and disadvantages of letting the team administer discipline to a team member?

  How could the company hedge its exchange rate risk

Ignoring taxes, what are East Coast Yachts' projected gains or losses from this proposed arrangement at the current exchange rate of $0.73€? What happens to profits if the exchange rate changes to $0.80€? At what exchange rate will the company bre..

  A consumer is being charged two different rates

1. Referring to the EAR, a key component to take into consideration is "compound interest" and this creates a major distinction between the APR and EAR. When it comes to the APR vs. EAR, does this mean that a consumer is being charged two di..

  Foreign exchange risk company faces

As the CFO of a multinational company, which financial securities can you use to manage the foreign exchange risk that your company faces?

  What is the standard deviation of returns

Over past five years a security had returns of 12%, 25%, -6%, -19%, and 19%. What is the standard deviation of these returns?

  Efficient capital structures for a manufacturing company

Suggest the most efficient capital structures for a manufacturing company and software development firm. Support your argument with examples.

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