What is the immediate dilution potential for this new stock issue?American Health Systems currently has 6,400,000 shares of stock outstanding and will report earnings of $13 million in the current year.
8.
value:
1.00 points
American Health Systems currently has 6,400,000 shares of stock outstanding and will report earnings of $13 million in the current year. The company is considering the issuance of 1,500,000 additional shares that will net $60 per share to the corporation.
a. What is the immediate dilution potential for this new stock issue? (Do not round intermediate calculations and round your answer to 2 decimal places.)
Dilution $ per share
b-1. Assume that American Health Systems can earn 8 percent on the proceeds of the stock issue in time to include them in the current year’s results. Calculate earnings per share. (Do not round intermediate calculations and round your answer to 2 decimal places.)
Earnings per share $
b-2. Should the new issue be undertaken based on earnings per share?
Yes
No
9.
value:
1.00 points
Assume Sybase Software is thinking about three different size offerings for issuance of additional shares.
Size of Offer Public Price Net to Corporation
a. $ 2.4 million $ 46 $ 42.60
b. 7.0 million 46 43.20
c. 28.0 million 46 43.50
What is the percentage underwriting spread for each size offer? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
Size of Offer Underwriting Spread
a. $2.4 million %
b. $7.0 million %
c. $28.0 million %
0.
value:
2.00 points
The Wrigley Corporation needs to raise $35 million. The investment banking firm of Tinkers, Evers, & Chance will handle the transaction.
a. If stock is utilized, 2,200,000 shares will be sold to the public at $17.20 per share. The corporation will receive a net price of $16.00 per share. What is the percentage underwriting spread per share?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Underwriting spread per share %
b. If bonds are utilized, slightly over 35,200 bonds will be sold to the public at $1,006 per bond. The corporation will receive a net price of $993 per bond. What is the percentage of underwriting spread per bond? (Relate the dollar spread to the public price.) (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
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