Chapter_19

Chapter_19 - Chapter 19 Problems 1-18 Input boxes in tan...

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Chapter 19 Problems 1-18 Input boxes in tan Output boxes in yellow Given data in blue Calculations in red Answers in green NOTE: Some functions used in these spreadsheets may require that the "Analysis ToolPak" or "Solver Add-in" be installed in Excel. To install these, click on "Tools|Add-Ins" and select "Analysis ToolPak and "Solver Add-In."
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Chapter 19 Question 1 Input Area: Shares outstanding 350,000 Price $85.00 New shares 70,000 New price $70.00 Output Area: a. New market value $34,650,000 b. Number of rights needed 5.00 c. P(x) $82.50 d. Value of a right $2.50 e. A rights offering usually costs less, it protects the proportionate interests of existing share- holders, and protects against underpricing.
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Chapter 19 Question 2 Input Area: Amount raised $50,000,000 Shares outstanding 5,200,000 Price $40 New price $35 Shareholder 1,000 Output Area: a. Maximum subscription price = current share price $40 Minimum is anything > 0 b. Number of new shares 1,428,571 Number of rights needed 3.64 c. P(X) $38.92 Value of a right $1.08 d. Before offer: $40,000 After offer: $40,000
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Chapter 19 Question 3 Input Area: Ex-rights price $80 Rights-on price $74.50 Funds needed $15,000,000 Price $40 Output Area: P(x) $6.273 Number of new shares 375,000 Number of old shares 2,352,273
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Chapter 19 Question 4 Input Area: Undervalued IPO $11 Overvalued IPO $6 Price $40 # of shares 1,000 1/2 # of shares 500 Output Area: If you receive 1000 shares each, the profit is: $5,000 Expected profit $(500) This is an example of the winner's curse.
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Chapter 19 Question 5 Input Area: Funds needed $25,000,000 Offer price $35 Spread 8% Output Area: Proceeds from sale $27,173,913 Number of shares offered 776,398
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This note was uploaded on 12/14/2010 for the course FINC 311 taught by Professor Stanley,t during the Fall '08 term at Winthrop.

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Chapter_19 - Chapter 19 Problems 1-18 Input boxes in tan...

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