# Register now to access 7 million high quality study materials (What's Course Hero?) Course Hero is the premier provider of high quality online educational resources. With millions of study documents, online tutors, digital flashcards and free courseware, Course Hero is helping students learn more efficiently and effectively. Whether you're interested in exploring new subjects or mastering key topics for your next exam, Course Hero has the tools you need to achieve your goals.

3 Pages

### FIN3300 Solution Ch15 (W 0818)

Course: FINANCE Fin3300, Summer 2010
School: CSU East Bay
Rating:

Word Count: 474

#### Document Preview

15: Solution Chapter Raising Capital Page 505 Questions: 1, 3, 4, 5, 7 1. a. The new market value will be the current shares outstanding times the stock price plus the rights offered times the rights price, so: New market value = 500,000(\$81) + 60,000(\$70) = \$44,700,000 b. The number of rights associated with the old shares is the number of shares outstanding divided by the rights offered, so: Number of rights...

Register Now

#### Unformatted Document Excerpt

Coursehero >> California >> CSU East Bay >> FINANCE Fin3300

Course Hero has millions of student submitted documents similar to the one
below including study guides, practice problems, reference materials, practice exams, textbook help and tutor support.

Course Hero has millions of student submitted documents similar to the one below including study guides, practice problems, reference materials, practice exams, textbook help and tutor support.
15: Solution Chapter Raising Capital Page 505 Questions: 1, 3, 4, 5, 7 1. a. The new market value will be the current shares outstanding times the stock price plus the rights offered times the rights price, so: New market value = 500,000(\$81) + 60,000(\$70) = \$44,700,000 b. The number of rights associated with the old shares is the number of shares outstanding divided by the rights offered, so: Number of rights needed = 500,000 old shares/60,000 new shares = 8.33 rights per new share c. The new price of the stock will be the new market value of the company divided by the total number of shares outstanding after the rights offer, which will be: PX = \$44,700,000/(500,000 + 60,000) = \$79.82 d. The value of the right Value of a right = \$81.00 79.82 = \$1.18 e. A rights offering usually costs less, it protects the proportionate interests of existing share-holders and also protects against underpricing. 3. Using the equation we derived in Problem 2, part c to calculate the price of the stock ex-rights, we can find the number of shares a shareholder will have ex-rights, which is: PX = \$74.80 = [N(\$81) + \$40]/(N + 1) N = 5.613 The number of new shares is the amount raised divided by the per-share subscription price, so: Number of new shares = \$20,000,000/\$40 = 500,000 And the number of old shares is the number of new shares times the number of shares ex-rights, so: Number of old shares = 5.613(500,000) = 2,806,452 1 4. If you receive 1,000 shares of each, the profit is: Profit = 1,000(\$7) 1,000(\$5) = \$2,000 Since you will only receive one-half of the shares of the oversubscribed issue, your profit will be: Expected profit = 500(\$7) 1,000(\$5) = \$1,500 is This an example of the winners curse. 5. Using X to stand for the required sale proceeds, the equation to calculate the total sale proceeds, including flotation costs is: X(1 .09) = \$60,000,000 X = \$65,934,066 required total proceeds from sale. So the number of shares offered is the total amount raised divided by the offer price, which is: Number of shares offered = \$65,934,066/\$21 = 3,139,717 7. We need to calculate the net amount raised and the costs associated with the offer. The net amount raised is the number of shares offered times the price received by the company, minus the costs associated with the offer, so: Net amount raised = (10,000,000 shares)(\$18.20) 900,000 320,000 = \$180,780,000 The company received \$180,780,000 from the stock offering. Now we can calculate the direct costs. Part of the direct costs are given in the problem, but the company also had to pay the underwriters. The stock was offered at \$20 per share, and the company received \$18.20 per share. The difference, which is the underwriters spread, is also a direct cost. The total direct costs were: Total direct costs = \$900,000 + (\$20 18.20)(10,000,000 shares) = \$18,900,000 We are given part of the indirect costs in the problem. Another indirect cost is the immediate price appreciation. The total indirect costs were: Total indirect costs = \$320,000 + (\$25.60 20)(10,000,000 shares) = \$56,320,000 This makes the total costs: Total costs = \$18,900,000 + 56,320,000 = \$75,220,000 2 The flotation costs as a percentage of the amount raised is the total cost divided by the amount raised, so: Flotation cost percentage = \$75,220,000/\$180,780,000 = .4161 or 41.61% 3
Find millions of documents on Course Hero - Study Guides, Lecture Notes, Reference Materials, Practice Exams and more. Course Hero has millions of course specific materials providing students with the best way to expand their education.

Below is a small sample set of documents:

CSU East Bay - MGMT - 3110
MGMT 3110: Project Management Assignment 7INSTRUCTIONS Answer should be typed with 12 Arial font Your answer must not exceed 1 page. At the top of the page write the following Last Name, First MI; MGMT 3110; Answer all the questionsAssignment #1. Answe
CSU East Bay - MGMT - 3110
MGMT 3110: Project Management Assignment 8INSTRUCTIONS Answer should be typed with 12 Arial font Your answer must not exceed 1 page. At the top of the page write the following Last Name, First MI; MGMT 3110; Answer all the questionsAssignment #1. Answe
CSU East Bay - MGMT - 3110
College of Business and Economics, California State University East BayMGMT 3110: Project ManagementFall Quarter 2010 Instructor: Dr. Vish HegdeGENERAL INFORMATIONClass Time: Classroom: Office: Office Phone: Office hours: Email: Monday/Wednesday 2:00
CSU East Bay - MGMT - 3110
College of Business and Economics, California State University East BayMGMT 3110: Project ManagementFall Quarter 2010 Instructor: Dr. Vish HegdeGENERAL INFORMATIONClass Time: Classroom: Office: Office Phone: Office hours: Email: Monday/Wednesday 2:00
CSU East Bay - MGMT - 3110
Project Management By: Vish Hegde Assignment 1INSTRUCTIONS Answer should be typed with 12 Arial font Your answer must not exceed 1 page. At the top of the page write the following o Assignment # o Name: Last Name, First MI Answer all the questions. o Be
CSU East Bay - MGMT - 3110
Project Management By: Dr. Vish Hegde Assignment #2INSTRUCTIONS Answer should be typed with 12 Arial font Your answer must not exceed 1 page. At the top of the page write the following o Name: Last Name, First MI o Assignment # Answer all the questions.
CSU East Bay - MGMT - 3110
Project Management By: Dr. Vish Hegde Assignment #3INSTRUCTIONS Answer should be typed with 12 Arial font Your answer must not exceed 1 page. At the top of the page write the following o Name: Last Name, First MI o Assignment # Answer all the questions.
CSU East Bay - MGMT - 3110
Project Management By: Dr. Vish Hegde Assignment #4INSTRUCTIONS Answer should be typed with 12 Arial font Your answer must not exceed 1 page. At the top of the page write the following o Name: Last Name, First MI o Assignment # Answer all the questions.
CSU East Bay - MGMT - 3110
MGMT 3110: Project Management Assignment 5REQUIRED PROBLEMS 1. Chapter 8 Problem 4 Suppose the same project has a constraint that only 3 resources are available each day of the project. What would be the optimal project duration and activity schedule (ac
CSU East Bay - MGMT - 3110
MGMT 3110: Project Management Assignment 6INSTRUCTIONS Answer should be typed with 12 Arial font Your answer must not exceed 1 page. At the top of the page write the following Last Name, First MI; MGMT 3110; Answer all the questionsAssignment #1. The f
CSU East Bay - MGMT - 3110
MGMT 3110: Project Management Assignment 6INSTRUCTIONS Answer should be typed with 12 Arial font Your answer must not exceed 1 page. At the top of the page write the following Last Name, First MI; MGMT 3110; Answer all the questionsAssignment #1. The f
CSU East Bay - MGMT - 3110
Project ManagementInstructor: Dr. Vish Hegde LectureChapter 1, 2, 3All Rights Reserved by Dr. Vish Hegde1What is a Project? Project Defined A complex, nonroutine, one-time effort limited by time, budget, resources, and performance specifications de
CSU East Bay - MGMT - 3110
Project ManagementInstructor: Dr. Vish Hegde LectureChapter 4 &amp; 5All Rights Reserved by Dr. Vish Hegde1Lecture Outline Defining the Project (Chapter 4) Step 1: Defining the Project Scope Step 2: Establishing Project Priorities Step 3: Creating the
CSU East Bay - MGMT - 3110
California State University East Bay College of Business &amp; EconomicsMGMT 3110: Project ManagementSlide presentationChapter 10 &amp; 11Instructor: Dr. Vish HegdeAll Rights Reserved by Dr. Vish Hegde1Managing versus Leading a Project Managingcoping with
CSU East Bay - MGMT - 3110
California State University East Bay College of Business &amp; EconomicsMGMT 3110: Project ManagementSlide presentationChapter 13 &amp; 14Instructor: Dr. Vish HegdeAll Rights Reserved by Dr. Vish Hegde1Project Monitoring System Structure What data are col
CSU East Bay - MGMT - 3110
Project Management Instructor: Dr. Vish Hegde Lecture Chapter 6All Rights Reserved by Dr. Vish Hegde1Developing the Project Plan The Project Network A flow chart that graphically depicts the sequence, interdependencies, and start and finish times of t
CSU East Bay - MGMT - 3110
Project Management Instructor: Dr. Vish Hegde Lecture Chapter 7All Rights Reserved by Dr. Vish Hegde1Risk Management Process Risk Uncertain or chance events that planning can not overcome or control. Risk Management A proactive attempt to recognize an
CSU East Bay - MGMT - 3110
Project Management Instructor: Dr. Vish Hegde Lecture Chapter 8All Rights Reserved by Dr. Vish Hegde1Types of Project Constraints Technical or Logic Constraints Constraints related to the networked sequence in which project activities must occur. Ph
CSU East Bay - MGMT - 3110
Project Management Instructor: Dr. Vish Hegde Lecture Chapter 9All Rights Reserved by Dr. Vish Hegde1Rationale for Reducing Project Duration Time Is Money: Cost-Time Tradeoffs Reducing the time of a critical activity usually incurs additional direct
DeAnza College - BUSINESS - 2041
NATURAL LAW AND POSITIVE LAW Law: A body of enforceable rules governing relationships among individuals and between individuals and their society. Natural Law: A system of universal moral and ethical principles that are inherent in human nature and that
DeAnza College - BUSINESS - 2041
JUDICIAL REVIEW Judicial Review: The process by which a court decides the constitutionality of legislative enactments and actions by the executive branch. While the U.S. Constitution makes no mention of the power of judicial review, Alexander Hamilton an
DeAnza College - BUSINESS - 2041
PRE-SUIT CONSIDERATIONS Consulting with an Attorney: The first step to take when contemplating a lawsuit, as well as when facing a lawsuit, is to consult with a qualified attorney. Legal Fees: The anticipated expenses of investigating and prosecuting or
DeAnza College - BUSINESS - 2041
FEDERALISM Federal Government: A form of government where states form a union and the sovereign power is divided between the national government and the various states. The Privileges and Immunities Clause: Article IV of the U.S. Constitution provides th
DeAnza College - BUSINESS - 2041
BUSINESS ETHICS: AN INTRODUCTION Ethics: Moral principles and values applied to social behavior. Business Ethics: Moral principles and values applied to situations that arise in a business setting. A particular challenge facing businesses is ethically ba
DeAnza College - BUSINESS - 2041
TORTS: AN INTRODUCTION Tort: A civil wrong, not arising from a breach of contract or other agreement. A breach of a legal duty that proximately causes another person harm or injury. The duty that is violated by the tortfeasor (i.e., the &quot;wrongdoer&quot;) must
DeAnza College - BUSINESS - 2041
NEGLIGENCE: BASIC PRINCIPLES Negligence: Failing to exercise the standard of care that a reasonable person would exercise in similar circumstances. In contrast to intentional torts, negligence requires no intent on the part of the tortfeasor, nor does it
DeAnza College - BUSINESS - 2041
INTELLECTUAL PROPERTY Intellectual Property: Any property resulting from intellectual, creative processes the product of one or more individual's mind. The framers of the U.S. Constitution recognized the need to protect and promote intellectual property
DeAnza College - BUSINESS - 2041
CLASSIFICATION OF CRIMES Crime: A wrong against society, defined in a statute and punishable by fines, imprisonment, or in rare cases death. Depending on their degree of seriousness, crimes are classified as felonies or misdemeanors. Felony: A crime such
DeAnza College - BUSINESS - 2041
CONTRACT VS. PROMISE Promise: A person's declaration that something will or will not happen in the future. Promisor: The person making the promise. Promisee: The person to whom the promisor made the promise.Contract: An agreement between two or more com
DeAnza College - BUSINESS - 2041
AGREEMENT Agreement: A meeting of two or more minds in regard to the terms of a contract, through offer and acceptance. Offer: A promise or commitment to perform or refrain from performing some specified future act made by the offeror. The offeror must s
DeAnza College - BUSINESS - 2041
CONSIDERATION Consideration: Value given in return for a promise. Consideration must be (1) legally sufficient and (2) bargained for by the party receiving it. Legally sufficient consideration may take the form of: (1) promising to do something that the
DeAnza College - BUSINESS - 2041
CONTRACTUAL CAPACITY Contractual Capacity: The minimum mental capacity required by law for a party who enters into a contract to be bound by it. Certain persons are generally not considered to have sufficient capacity to be bound by their contracts: Mino
DeAnza College - BUSINESS - 2041
MISTAKE Mistake: The parties entered into a contract with different understandings of one or more material facts relating to the subject matter of the contract. Mutual (Bilateral) Mistake of Fact: A mistake on the part of both contracting parties as to s
DeAnza College - BUSINESS - 2041
STATUTES OF FRAUDS Statute of Frauds: A statute that requires certain types of contracts to be evidenced by a writing in order to be enforceable. The following types of contracts generally must be evidenced by a writing to be enforceable: (1) contracts i
DeAnza College - BUSINESS - 2041
TYPES OF MONETARY DAMAGES A breach of contract entitles the non-breaching party to sue for money damages, including: Compensatory Damages: Damages that compensate the non-breaching party for the injuries or losses actually sustained as a result of the br
DeAnza College - BUSINESS - 2041
E-CONTRACT ESSENTIALS An offer to form a contract electronically should include: (1) a description of what action on the part of the offeree will constitute acceptance, (2) a provision specifying acceptable forms of payment, including applicable taxes an
DeAnza College - BUSINESS - 2041
AGENCY RELATIONSHIPS Agency: A fiduciary relationship that results when one person (the principal) manifests her consent that another person (the agent) will act on her behalf and subject to her control and the agent manifests his consent to so act. Fidu
DeAnza College - BUSINESS - 2041
ACTUAL AUTHORITY Express Authority: Authority declared in clear, direct, and definite terms, orally or in writing. Equal Dignity Rule: If a contract being executed by an agent on the principal's behalf is written, most states require that the agent's aut
DeAnza College - BUSINESS - 2041
EMPLOYMENT AT WILL Absent a contrary provision in a written agreement between the employer and employee, employment is presumed to be &quot;at will&quot; meaning that the employer may terminate the employee at any time, for any reason, or for no reason at all. The
DeAnza College - BUSINESS - 2041
EMPLOYMENT DISCRIMINATION Equal Employment Opportunity Commission (EEOC): The federal agency charged with enforcing Title VII of the Civil Rights Act of 1964 and other federal statutes and regulations prohibiting employment discrimination. Employment Dis
DeAnza College - BUSINESS - 2041
ISSUES IN SELECTING A BUSINESS FORM Entrepreneur: Someone who initiates and assumes the financial risk of a new enterprise. One or more entrepreneurs setting out to start a business should consider the following four factors when deciding what form of bu
DeAnza College - BUSINESS - 2041
LLCs Limited Liability Company (&quot;LLC&quot;): A hybrid form of business, which is taxed like a partnership while offering owners the limited liability of a corporation. An LLC is composed of one or more owner(s), called member(s), who must file articles of org
DeAnza College - BUSINESS - 2041
BASICS OF CORPORATIONS Corporation: A legal entity formed in compliance with the statutory requirements of its state of incorporation, owned by shareholders whose liability is limited to their investment in the corporation, and managed by (i) a board of
DeAnza College - BUSINESS - 2041
C hp 1 - I n t ro to Law-questionsPage history last edited by abogado 8 mos agoLaw 10 - In t ro to Law - Chp. 1 - Int ro to Law Questions - Due 2/25/09 A1. John is a judge. The function of John and other judges is to a. decide cases on the basis of thei
DeAnza College - BUSINESS - 2041
Chp 2 - Courts and Alternative Dispute Resolution QuizPage history last edited by abogado 7 mos agoQuiz B - Law 10 - CHAPTER 2: COURTS AND ALTERNATIVE DISPUTE RESOLUTION MULTIPLE CHOICE QUESTIONS 1. The Ohio state legislature passes a law to regulate lo
DeAnza College - BUSINESS - 2041
Chp 3 Court ProceduresPage history last edited by abogado 7 mos agoMULTIPLE CHOICE QUESTIONS 1. Glen retains Holly, an attorney, on a contingent-fee basis to seek \$100,000 in damages in a personal-injury suit against Interstate Shipping Corporation. Gle
DeAnza College - BUSINESS - 2041
Chp 5 Ethics and Business Decision MakingPage history last edited by abogado 5 months agoMULTIPLE CHOICE QUESTIONS 1. John is sales manager for Kleen N Brite Products, Inc. Compared to Johns personal activities, his business activities involve a. more c
DeAnza College - BUSINESS - 2041
1. Bob pushes Carol. Carol falls and breaks her arm. Bob is liable for the injury a. if Bob intended to push Carol. b. only if Bob did not intend to break Carols arm. c. only if Bob had a bad motive for pushing Carol. d. only if Bob intended to break Caro
DeAnza College - BUSINESS - 2041
C hp 7 - Negligence and Strict L iability1. Kelly is injured when she slips and falls on Lees sidewalk. To determine whether Lee owed a duty of care to Kelly, Lee is subject to t he standard of a. a realistic person. b. a reasonable person. c. a recogniz
DeAnza College - BUSINESS - 2041
Chp 7 - Negligence and Strict LiabilityPage history last edited by abogado 6 mos agoMULTIPLE CHOICE QUESTIONS 1. Bette backs out of City Parking Garage, colliding with Dills car. Dill may recover \$7,500 to cover the cost of the repairs if Bette failed t
DeAnza College - BUSINESS - 2041
The intentional torts discussed in Chapter 6 all involve acts that the tortfeasor (the one committing the tort) intended to commit. In this chapter, we examine the tort of negligence, which involves acts that depart from a reasonable standard of care and
DeAnza College - BUSINESS - 2041
Chp 8 - Intellectual PropertyPage history last edited by abogado 6 mos agoMULTIPLE CHOICE QUESTIONS 1. Jill develops a new espresso machine, which she names Quik Shot. She also writes the operating manual. Jill can obtain trademark protection for a. the
DeAnza College - BUSINESS - 2041
ost people think of wealth in terms of houses, land, cars, stocks, and bonds.Wealth, however, also includes intellectual property, which consists of the products that result from intellectual, creative processes. Although it is an abstract term for an abs
DeAnza College - BUSINESS - 2041
C hp 9 C riminal Law and Cyber C rimesPage history last edited by abogado 5 mos agoMULTIPLE CHOICE QUESTIONS 1. Gail is a payday lender charged with filing false claims in bankruptcy proceedings against her debtors. The standard of proof to f ind a defe
DeAnza College - BUSINESS - 2041
Cyber crimes . Financial crimes using computer to conduct fraudulently financial t ransactions . Identity theft stealing another persons identity (SSN) . Hacking gain access to anothers computerCyber terrorism . Shut down FAA . 1984 computer fraud and ab
DeAnza College - BUSINESS - 2041
Chapter10Nature&amp;Terminology1. Cathy assures Don that she will deliver his products as he directs. An assurance that one will do something in the future is part of the definition of a. a declaration. b. a moral obligation. c. an ethical principle. d. a pr
DeAnza College - BUSINESS - 2041
C hapter 10 - Natu re and Terminology A1. Expert Pavers, Inc., contracts with Fabricated Building Corporation to repave Fabricateds parking lot for which Fabricated agrees to pay. The elements of this, and any other, contract do not include a. capacity. b
DeAnza College - BUSINESS - 2041
1. May tries to start her new car with no success. She yells that she will sell the car to anyone for \$10. Nick, a passerby who owns Nicks Preowned Autos, hands May \$10. This is a. a valid acceptance because May is seriously frustrated. b. a valid accepta
DeAnza College - BUSINESS - 2041
Chp 11 - Agreement1. An officer of International Sales Corporation makes overtures to a representative of Global Distribution, Inc., regarding a business deal. Under the objective theory of contracts, the officers words and conduct are held to mean whate
DeAnza College - BUSINESS - 2041
Chapter12Consideration 1. Rollo promises to perform, for a price, shoe repair services in affiliation with Togs n Things, a clothing store. To support a contract, the consideration exchanged by the parties must be a. adequately considerate. b. equally val
DeAnza College - BUSINESS - 2041
CHAPTER 12: CONSIDERATION MULTIPLE CHOICE QUESTIONS 1. Ida promises to pay Jon, her son, \$15,000 if he obtains his degree at Kappa University, where he is currently in his second year. Jon graduates. Ida is a. not required to pay, because Jon was already