Question
In: Finance
Jordan Broadcasting Company is going public at $48 net per share to the company. There also...
Jordan Broadcasting Company is going public at $48 net per share to the company. There also are founding stockholders that are selling part of their shares at the same price. Prior to the offering, the firm had $30 million in earnings divided over 10 million shares. The public offering will be for 6 million shares; 3 million will be new corporate shares and 3 million will be shares currently owned by the founding stockholders.
a. What is the immediate dilution based on the
new corporate shares that are being offered? (Do not round
intermediate calculations and round your answer to 2 decimal
places.)
b. If the stock has a P/E of 26 immediately
after the offering, what will the stock price be? (Do not
round intermediate calculations and round your answer to 2 decimal
places.)
c. Should the founding stockholders be pleased
with the $48 they received for their shares?
| Yes | |
| No |
Solutions
jeff jeffy answered 10 months agoRelated Solutions
Jordan Broadcasting Company is going public at $47 net per share to the company. There also...
Jordan Broadcasting Company is going public at $47 net per share to
the company. There also are founding stockholders that are selling
part of their shares at the same price. Prior to the offering, the
firm had $31 million in earnings divided over 8 million shares. The
public offering will be for 4 million shares; 2 million will be new
corporate shares and 2 million will be shares currently owned by
the founding stockholders.
a. What is the immediate dilution...
A hedge fund with net asset value of $48 per share currently has a high water...
A hedge fund with net asset value of $48 per share currently has
a high water mark of $51. Suppose it is January 1, the standard
deviation of the fund’s annual returns is 45%, and the risk-free
rate is 5%. The fund has an incentive fee of 20%, but its current
high water mark is $51, and net asset value is $48.
a. What is the value of the annual incentive fee
according to the Black-Scholes formula? (Do not round...
The current stock price for a company is $48 per share, and there are 5 million...
The current stock price for a company is $48 per share, and
there are 5 million shares outstanding. The beta for this firms
stock is 1.2, the risk-free rate is 4.2, and the expected market
risk premium is 6.4%. This firm also has 120,000 bonds outstanding,
which pay interest semiannually. These bonds have a coupon interest
rate of 6%, 10 years to maturity, a face value of $1,000, and an
annual yield to maturity of 8.1%. If the corporate tax...
Angel Enterprise was going public in 2018. You were wondering whether the $30 per share offer...
Angel Enterprise was going public in 2018. You were wondering
whether the $30 per share offer price is a fair price. You decided
to use discounted cash flow approach to value the company’s stock.
You gathered the following data: Year FCF Other Data 2019 $600,000
Growth rate of FCF beyond 2023 = 3% 2020 $900,000 Weighted Average
Cost of Capital (WACC) = 10% 2021 $1,400,000 The firm has no debt
2022 2023 $1,800,000 $2,500,000 Number of common shares outstanding
=...
Angel Enterprise was going public in 2018. You were wondering whether the $30 per share offer...
Angel Enterprise was going public in
2018. You were wondering whether the $30 per share offer price is a
fair price. You decided to use discounted cash flow approach to
value the company’s stock. You gathered the following data:
Year
FCF
Other Data
2019
$600,000
Growth rate of FCF beyond 2023 = 3%
2020
$900,000
Weighted Average Cost of Capital (WACC) = 10%
2021
$1,400,000
The firm has no debt
2022
2023
$1,800,000
$2,500,000
Number of common shares outstanding =...
Angel Enterprise was going public in 2018. You were wondering whether the $30 per share offer...
Angel Enterprise was going public in 2018. You were wondering
whether the $30 per share offer price is a fair price. You decided
to use discounted cash flow approach to value the company’s stock.
You gathered the following data: Year FCF Other Data 2019 $600,000
Growth rate of FCF beyond 2023 = 3% 2020 $900,000 Weighted Average
Cost of Capital (WACC) = 10% 2021 $1,400,000 The firm has no debt
2022 2023 $1,800,000 $2,500,000 Number of common shares outstanding
=...
Air Jordan as a company is a subsidiary of Nike. Can it also be considered as...
Air
Jordan as a company is a subsidiary of Nike. Can it also be
considered as a competitor?
Assume a company has taxable income (EBT) of $1.00 per share. Assume also that the corporate...
Assume a company has taxable income (EBT) of $1.00 per share.
Assume also that the corporate tax rate is 30% on profits and the
rich doctor/lawyer/etc. investor’s individual tax rate is
50%. Assume the company pays out all its net
income as a fully-franked dividend to the investors.
Calculate the after-tax dividend per share that the investor
could put towards her yearly smashed avocado budget under both A) a
classical taxation system and B) a dividend imputation system.
Every public company has a P/E ratio. It is the current market value per share of...
Every public company has a P/E ratio. It is the current market
value per share of the company divided by the expected future
earnings of that company. Many investors use this ratio as a method
of determining the relative value of a stock because it tells that
investor how much you are paying for each $ of future earnings. For
example, Coca-Cola with a P/E ratio of 20 tells you that you are
paying $ 20 a share for every...
Earnings per share (EPS) is calculated using net earnings if a company follows IFRS. what are...
Earnings per share (EPS) is calculated using net
earnings if a company follows IFRS. what are the pros and cons of
calculating EPS on comprehensive income rather than net
income
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- You have invested 30 percent of your portfolio in Jacob, Inc., 40 percent is Bella Co.,...
- Parallel Arrays This question is in MindTap Cengage Summary In this lab, you use what you...
- 5. You have invested 30 percent of your portfolio in Jacob, Inc., 40 percent is Bella...
- JAVA Write a test program that prompts the user to enter a series of integers and...
- (2) Cite an example on how organizations like Google, Facebook, Youtube etc collect data for image...
- The legal landscape is perpetually changing. Psychologists must remain abreast of these changes to avoid potentially...
- We are evaluating a project that costs $1.68 million, has a six-year life, and has no...
ADVERTISEMENT