Redirect Energy Corporation has issued rights to its shareholders. The subscription price is $54, and seven rights are needed along with the subscription price to buy one of the new shares. The stock is selling for $67 rights-on. a. What would be the value of one right? (Round the final answer to 2 decimal places.) Value of one right b. If the stock goes ex-rights, what would the new stock price be? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) New stock price $
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- Hassinah, Incorporated, is proposing a rights offering. Presently there are 1,000,000 shares outstanding at $78 each. There will be 100,000 new shares offered at $70 each. a. What is the new market value of the company? (Do not round intermediate calculations.) b. How many rights are associated with one of the new shares? (Do not round intermediate calculations.) c. What is the ex-rights price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) d. What is the value of a right? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. New market value b. Number of rights needed c. Ex-rights price d. Value of a rightSuppose you have 1,000 common shares of Burnside Bakeries. The EPSis $6.00, the DPS is $3.00, and the stock sells for $90 per share. Burnsideannounces a 3-for-1 split. Immediately after the split, how manyshares will you have? (3,000) What will the adjusted EPS and DPS be?($2 and $1) What would you expect the stock price to be? ($30)Suppose that an investor purchases the common stock at the current market price of $58/share and simultaneously sells for $12 a call to buy the shares at the strike price of $50. At the expiration of the call, price of stock is $77. What is the net profit on the position for this investor? (Round your answer the nearest dollar, do not enter with the dollar sign)
- ABC Inc.’s perpetual preferred stock sells for $56 per share, and it pays an $9 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of $4 per share. What is the company’s cost of preferred stock for use in calculating the WACC?Note: Enter your answer rounded off to two decimal points.Do not enter % in the answer box. For example, if your answer is 0.12345 thenenter as 12.35 in the answer box.Suppose you have 100 common shares of Tillman Industries. The EPS is $4.00, theDPS is $2.00, and the stock sells for $60 per share. Now Tillman announces a twofor-one split. Immediately after the split, how many shares will you have, what willbe the adjusted EPS and DPS, and what would you expect the stock price to be?Suppose you own 2,000 common shares of Laurence Incorporated. The EPSis $10.00, the DPS is $3.00, and the stock sells for $80 per share. Laurenceannounces a 2-for-1 split. Immediately after the split, how many shareswill you have, what will the adjusted EPS and DPS be, and what would youexpect the stock price to be?
- Refer to Figure 2.8 and look at the listing for Hewlett Packard. Required: a. How many shares can you buy for $25,000? Note: Round down your answer to the nearest whole number. b. What would be your annual dividend income from those shares? Note: Round down your intermediate calculations to the nearest whole number. Do not leave the cell blank. Enter zero (0) if required. Round your answer to 2 decimal places. c. What must be Hewlett Packard's earnings per share? Note: Round your answer to 2 decimal places. d. What was the firm's closing price on the day before the listing? Note: Round your answer to 2 decimal places. a. Number of shares b. Annual dividend income c. Earnings per share d. Yesterday's closing price NAME Herbalife Nutrition SYMBOL CLOSE HLF Hershey HSY Hess Corporation HES Hewlett Packard HPE HD HMC HON Home Depot Honda Honneywell CHANGE 0051.45 -0.05 1.64 -3.52 0.25 2.17 0.13 3.69 177.57 80.39 14.01 319.22 32.54 227.22 VOLUME 0000434,355 658,253 2,143,509 9,448,992…ABC has 1 million shares outstanding, each of which has a price of $24. It has made a takeover offer of XYZ Corporation which has 1 million shares outstanding, and a price per share of $2.39. Assume that the takeover will occur with certainty and all market participants know this. Furthermore, there are no synergies to merging the two firms. a. Assume ABC made a cash offer to purchase XYZ for $5.04 million. What happens to the price of ABC and XYZ on the announcement? What premium over the current market price does this offer represent? b. Assume ABC makes a stock offer with an exchange ratio of 0.21. What happens to the price of ABC and XYZ this time? What premium over the current market price does this offer represent? c. At current market prices, both offers are offers to purchase XYZ for $5.04 million. Does that mean that your answers to parts (a) and (b) must be identical? Explain. a. Assume ABC made a cash offer to purchase XYZ for $5.04 million. What happens to the price of ABC…Pandora Box Company Inc. makes a rights issue at a subscription price of $5 a share. One new share can be purchased for every five shares held. Before the issue there were 15 million shares outstanding and the share price was $12. a. What is the total amount of new money raised? (Do not round intermediate calculations. Enter your answer in millions.) b. What is the expected stock price after the rights are issued? (Enter your answer rounded to 4 decimal places.) c. By what percentage would the total value of the company need to fall before shareholders would be unwilling to take up their rights? (Do not round intermediate calculations. Enter your answer as a positive percent rounded to 2 decimal places.) d. Suppose that you initially own 100 shares plus $100 in the bank. If you take up your rights issue, what will be your total wealth after the issue is completed? (Do not round intermediate calculations. Enter your answer rounded to nearest whole dollar.) e. Suppose that the company…
- What is ex-rights price of a stock? Calculate the ex-rights price if the subscription price is $50, number of rights to buy 1 share are 20 and the value of a right is $0.30Toronto Corporation wants to raise $1,210,000 via a rights offering. The company currently has 220,000 shares of common stock outstanding that sells for $32 per share. The issue will allow current stockholders to purchase one additional share for 5 rights. a) What will be the ex-rights stock price, the value of a right, and the appropriate subscription price? b) If 2 rights are needed to purchase on additional share, how does the stockholders’ wealth change? c) Why do you think the company chose a rights issue rather than a general cash offer to raise new capital?Suppose you own 1,000 common shares of Laurence Incorporated. The EPS is $12.00, the DPS is $5.00, and the stock sells for $75 per share. Laurence announces a 2-for-1 split. Immediately after the split, how many shares will you have? Round your answer to the nearest whole number. What will the adjusted EPS and DPS be? Round your answers to the nearest cent.