Young Corporation stock currently sells for $30 per share. There are one million shares currently outstanding. The company announces plans to raise $3 million by offering shares to the public at a price of $30 per share. |
a. | If the underwriting spread is 9%, how many shares will the company need to issue in order to be left with net proceeds of $3 million? (Round your answer to the nearest whole.) | |
Number of shares |
b. | If other administrative costs are $65,000, what is the dollar value of the total direct costs of the issue? (Round your answer to the nearest dollar.) | |
Dollar value of total direct costs $ |
c. | If the share price falls by 4% at the announcement of the plans to proceed with a seasoned offering, what is the dollar cost of the announcement effect? (Round your answer to the nearest dollar.) | |
Dollar value of total direct costs $ |
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