What will be the firm value-the number of outstanding shares

Assignment Help Financial Management
Reference no: EM132040410

You work in the Finance Department for Flynn, Inc. Your firm needs to raise $6,500,000,000 ($6.50B) to finance new capital investments. Your boss is considering raising this capital using a rights offering. He has asked you to analyze the effect of such an offering on the firm’s shareholders. The firm has 750,000,000 shares outstanding. These are currently selling on the stock exchange for $32.52. Calculate the current market value of firm equity. To raise the needed $6,500,000,000 in new capital, your boss is considering issuing new shares at a subscription price of $25 in the rights offering. How many new shares will the firm need to issue to raise the $6,500,000,000? Calculate the number of rights that will be needed to purchase a new share. During the subscription period, what will be the market value of a right? After the rights offering, what will be the firm value? The number of outstanding shares? The share price?

Reference no: EM132040410

Questions Cloud

Estate would he have in that property after squatting : If Mr. Robinson stays in the house for 3 years and obtains title, what type of estate would he have in that property after squatting ?
Expected to be constant over the project three-year life : Revenues and other operating costs are expected to be constant over the project’s 3-year life.
Calculate the payback period and profitability index : Calculate the IRR. Calculate the Profitability Index. Calculate the Payback Period.
Sales budget including schedule of expected cash collection : Sales Budget including schedule of expected cash collection. Production Budget. Direct Materials budget including schedule of expected cash disbursements
What will be the firm value-the number of outstanding shares : Calculate the number of rights that will be needed to purchase a new share. what will be the firm value? The number of outstanding shares? The share price?
What amount of income will be recognized in respect : What amount of income will be recognized in respect of the grant in the year to 31 March 2010?
What is the value of firm operations today : Find the horizon value in year 5 for the firm’s constant growth phase. What is the value of firm operations today?
Calculate the current market value of firm equity : Calculate the current market value of firm equity. During the subscription period, what will be the market value of a right?
Weighted average cost of capital for the company : Calculate the Weighted Average Cost of Capital (WACC) for the following company.

Reviews

Write a Review

Financial Management Questions & Answers

  The present value of the stream of savings estimates

The present value of the stream of savings estimates is?

  Calls were traded on exchanges before puts

Calls were traded on exchanges before puts.

  What was rationale for williams act-hart-scott-rodino act

What was the rationale for the Williams Act? What was the purpose of the Hart-Scott-Rodino Act?

  Use discounted payback decision rule to evaluate project

Suppose your firm is considering investing in a project with the cash flows shown below, Use the discounted payback decision rule to evaluate this project.

  Money by taking advantage of the efficient market hypothesis

Dimensional Fund Advisors is an investment consulting firm that is a believer in market efficiency. How does this firm make money by taking advantage of the Efficient Market Hypothesis?

  The future value of an investment will increase

Holding all else constant, the future value of an investment will increase if:

  What is its yield to maturity

A zero-coupon bond with face value $1,000 and maturity of five years sells for $738.22. What is its yield to maturity?

  What is the market value of assets of the firm

The book value of equity of a firm is $100 million and the market value of equity is $200 million. The face value of debt of the firm is $50 million and the market value of debt is $60 million. What is the market value of assets of the firm?

  Expand an existing project

S. Miller is looking to expand an existing project. The expansion requires an immediate outflow (an investment today) of $81 million. S. Miller anticipates that the project will generate one future cash flow of $175 million that will arrive at the en..

  Simple interest on its savings account balances

First City Bank pays 6 percent simple interest on its savings account balances, whereas Second City Bank pays 6 percent interest compounded annually.

  Management ratios-capitalization ratios and coverage ratios

There are two types of debt management ratios: capitalization ratios and coverage ratios.

  Using the marginal tax rates from your book

Kyle has been asked to serve as a consultant on a building project and can get paid his fee up-front or at the end of the long project. He has agreed to do the consulting work for a fee of $20,000. Using the Marginal Tax Rates from your book (pp. 106..

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