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
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.
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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