Project #97287 - Corporate Finance & Venture Capital/Securities Formulas 19Q

Corporate Finance 10Q:

1. The authorized share capital of the Alfred Cake Company is 110,000 shares. The equity is currently shown in the company’s books as follows:

 

     
  Common stock ($2 par value) $ 79,000  
  Additional paid-in capital   29,000  
  Retained earnings   49,000  
 

  Common equity $ 157,000  
  Treasury stock (4,000 shares)   23,000  
 

  Net common equity $ 134,000  
 




 

a. How many shares are issued?

 

  Number of shares issued  

 

b. How many shares are outstanding?

 

  Outstanding shares  

 

c. How many more shares can be issued without the approval of shareholders?

 

  Number of shares issued  

 

 

2.

Common Products has just made its first issue of stock. It raised $1.3 million by selling 250,000 shares of stock to the public. These are the only shares outstanding. The par value of each share was $2. Complete the following table:

 

   
  Common stock (par value) $  
  Additional paid-in capital $  
  Retained earnings $  
 
  Net common equity $ 1,800,000  
 

3.

If there are 10 directors to be elected and a shareholder owns 150 shares, calculate the maximum number of votes that he or she can cast for a favorite candidate under each of the voting methods.


 

  Maximum
Number of Votes
  a. Majority voting         
  b. Cumulative voting         

4.

The shareholders of the Pickwick Paper Company need to elect ten directors. There are 110,000 shares outstanding.

 

a.

What is the minimum number of shares you need to own to ensure that you can elect at least one director if the company has majority voting?

 

  Number of shares  

 

b.

What is the minimum number of shares you need to own to ensure that you can elect at least one director if the company has cumulative voting? (Round your answer to the nearest whole number.)

 

  Number of shares  

 

Venture Capital and Securities 9Q:

1.

Moonscape has just completed an initial public offering. The firm sold 3 million shares at an offer price of $10 per share. The underwriting spread was $.70 a share. The price of the stock closed at $16 per share at the end of the first day of trading. The firm incurred $400,000 in legal, administrative, and other costs. What were flotation costs as a fraction of funds raised? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

  Costs as percent of funds raised %  

2.

Young Corporation stock currently sells for $40 per share. There are 1 million shares currently outstanding. The company announces plans to raise $5 million by offering shares to the public at a price of $40 per share.


 

a.

If the underwriting spread is 6%, how many shares will the company need to issue in order to be left with net proceeds of $5 million? (Do not round intermediate calculations. Round your answer to the nearest whole number.)


 

  Number of shares  


 

b.

If other administrative costs are $60,000, what is the dollar value of the total direct costs of the issue? (Enter your answer in dollars not in millions. Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.)


 

  Total direct costs $  


 

c.

If the share price falls by 5% at the announcement of the plans to proceed with a seasoned offering, what is the dollar cost of the announcement effect? (Enter your answer in dollars not in millions.)


 

  Cost of the announcement effect $  

3.

Associated Breweries is planning to market unleaded beer. To finance the venture, it proposes to make a rights issue with a subscription price of $10. One new share can be purchased for every four shares held. The company currently has outstanding 160,000 shares priced at $40 a share. Assuming that the new money is invested to earn a fair return, give values for the following:

 

a. Number of new shares.

 

  Number of new shares  

 

b. Amount of new investment.

 

  New investment $  

 

c. Total value of company after issue.

 

  Value of company $  

 

d. Total number of shares after issue.

 

  Total number of shares  

 

e. Share price after the issue.

 

  Share price after issue $  

 

 

Subject Mathematics
Due By (Pacific Time) 12/05/2015 12:00 pm
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