09_MoF_Mo1_2016_FS

Description:

Answer all questions and then press submit. We will discuss the solutions together.


In a constrained open pricing IPO:






Saturn Inc.’s equity value is $25million with 5million shares outstanding. Saturn raises an additional $4 million by placing 2million shares at $2 each to a group of institutional investors. What is the post % ownership of the old shareholders?






In a rights issue, the share price may not necessarily fall to its theoretical ex-rights price on the ex-rights date. Why?






An underwriter...






Luther Industries currently has 100 million shares of stock outstanding at a price of $25 per share. The company would like to raise money and has announced a 1:20 rights issue. The subscription price for the new shares is $20 per share. The amount of money that Luther will raise through its rights offering, assuming all rights are exercised, is closest to: