What is the theoretical value of the stock ex-right

Assignment Help Financial Management
Reference no: EM131990072

A Company’s common is selling for $60 per share. It needs $210 million for an expansion project and the IBs suggests the funds could be raised through a right offering. The subscription price is set $42.

a. What is the theoretical value of the stock ex-right?

b. What is the value of one right?

c. If you didn't have the funds to take advantage of the right offering or if you have less than the number of rights required to buy one new share, what course of action (s) would you take?

Reference no: EM131990072

Questions Cloud

The stock is expected to pay annual dividends forever : What is the price of Platinum Water Shipping stock expected to be in 2 years. The stock is expected to pay annual dividends forever.
You willing to pay each month toward the loan : What amount are you willing to pay each month toward the loan? How long do you expect to pay on the loan?
What is the value of stock today : Treasury bills yield 5% and the return on market is 10%. The beta for the firm is estimated at 1.5. What is the value of the stock today?
What is after-tax cost of preferred stock : Flotation costs for new issuances of preferred stock are 8% of the stock value. What is the after-tax cost of preferred stock if the firm's tax rate is 37%?
What is the theoretical value of the stock ex-right : What is the theoretical value of the stock ex-right? What is the value of one right?
What is required rate of return : The year end dividend is expected to be $2.95 assuming a constant growth rate of 7%. What is the required rate of return?
What might cause firm to face capital constraints : What options do you have to address any and all deficits in cash over the next fiscal? What might cause a firm to face capital constraints? Provide an example
Assuming all employees have the same amount of np time : Assuming all employees have the same amount of NP time, calculate the direct nursing staff NP time for the new observation unit.
Forward premium/discount on the norwegian krones : What is the 90 day forward premium/discount on the Norwegian krones? Obtain a forecast of the krone-dollar 3 month ahead spot exchange rate.

Reviews

Write a Review

Financial Management Questions & Answers

  Consistent with a moderately risk averse investor

Assume you have received $300,000 from your uncle’s estate after his death. Select an appropriate investment policy for investing this inheritance that is consistent with a moderately risk averse investor in each scenario below: you plan on working f..

  Skateboard sales are expected to increase

Broussard Skateboard's sales are expected to increase by 15% from $8.4 million in 2016 to $9.66 million in 2017.

  Makers take to reduce the degree of synchronization

It has been argued that if one could perfectly synchronize a firm's cash inflows and outflows, short-term financial planning would be unnecessary. Do you agree? What actions can the firm's financial decision-makers take to reduce the degree of synchr..

  Two parts and pertains to the yield curve

The following question has two parts and pertains to the yield curve. Suppose on February 6, 2007, the following information is available from the Treasury spot curve: What is the implied forward rate on a one-year zero coupon Treasury one year from ..

  Financial intermediaries perform that benefit society

What are the economic functions that financial intermediaries perform that benefit society? In your answer, discuss the relationship of financial intermediaries and financial markets to the savings-investment process within an economy and to each oth..

  About the competitive markets

The curse of competitive markets A. May be lessened by obtaining patents for new ideas that protect companies from competitors OR B. Implies that profitable industries will become smaller as companies drop out to avoid competition OR C. Means that mo..

  What is the annual equivalent of cost

Ten years ago, Jacobson Recovery purchased a wrecker for $290,000 to move disabled 18-wheelers. He anticipated a salvage value of $30,000 after 10 years. If the annual M&O cost was $25,000 the first year and increased by a constant $1000 per year wha..

  European put option on the stock with strike price

An investor creates a protective put position by buying one share of a stock at $50 and buying a European put option on the stock with strike price $45 at $1.25. What is his profit if he holds his position until maturity of the option and the stock p..

  What is the value of share of preferred stock

What is the value of share of preferred stock that promises to pay $1.20 every year,indefinitely, if you have a required rate of return of 8.21%?

  Determine what is the companys total book value of debt

Jiminy's Cricket Farm issued a bond with 15 years to maturity and a semiannual coupon rate of 10 percent 4 years ago.

  Weighted average cost-after-tax cost of debt for the firm

Your firm is considering a new investment proposal and would like to calculate the weighted average cost of capital. A bond that has a $1,000 par value (face value) and a contract or coupon interest rate of 12.1% that is paid semi annually. The bond ..

  Considering a p4p program to increase preventative care

Sunnyvale Primary Care (SPC) is considering a P4P program to increase preventative care for its diabetic patients. HbA1c is a blood test used to determine how well diabetes is being controlled. For the Jul-Dec period, what would be each physician's P..

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