TacosRus has decided to raise $6.665 million in the capital by issuing 500,000 new shares of...

TacosRus has decided to raise $6.665 million in the capital by issuing 500,000 new shares of common stock in a rights offering. Currently, there are 1.5 million shares outstanding. What will each current shareholder have to provide to purchase one share of this new offering?

Solutions

Expert Solution

Calculate the amount each shareholder has to provide for purchase one share in new offering
Amount to be provided	Amount to be raised/No of shares issued
Amount to be provided	6.665 million/1500000
Amount to be provided	6665000/1500000
Amount to be provided	$4.44

Thus, each shareholder will have to be provide $4.44

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

Metlock Inc. has decided to raise additional capital by issuing $189,000 face value of bonds with...

Metlock Inc. has decided to raise additional capital by issuing $189,000 face value of bonds with a coupon rate of 9%. In discussions with investment bankers, it was determined that to help the sale of the bonds, detachable stock warrants should be issued at the rate of one warrant for each $100 bond sold. The value of the bonds without the warrants is considered to be $131,750, and the value of the warrants in the market is $23,250. The bonds...

A winery decided to raise capital through IPO. The company has 1000 shares outstanding, and each...

A winery decided to raise capital through IPO. The company has 1000 shares outstanding, and each was valued at $100. CEO proposed to issue 1000 more shares. The IB set the offering price at $100 a share, the shares opened at $100, and quickly jumped to $130, the closing price on the first day of trading was $110. What was the underpricing? What is the total market value of equity in the winery after the IPO? 10%, 210 000? 30%,...

Firms raise capital from investors by issuing shares in the primary markets. Does this imply that...

Firms raise capital from investors by issuing shares in the primary markets. Does this imply that corporate financial managers can ignore trading of previously issued shares in the secondary market?

2. Arcarde Ltd issues both ordinary shares and preference shares to raise capital, in which 500,000...

2. Arcarde Ltd issues both ordinary shares and preference shares to raise capital, in which 500,000 ordinary shares have been issued at the price of $10 and 100,000 preference shares with a par value of $100. a. Company promises to pay an annual dividend rate of 6.5% per share for its preference shares. If similar investment has a rate of return of 10% p.a, what is the fair price of Arcarde’s preference share? b. Company also plans to pay dividend...

Your company plans to raise $100 million to finance its new two-year project by issuing new...

Your company plans to raise $100 million to finance its new two-year project by issuing new two-year bonds (with annual coupons and annual compounding). Your company and its new project are currently considered risk-free. Unfortunately, covenants in the preexisting debt issued during harder times impose restrictions on the amount of new debt. Specifically, if the face value of the new bond issue is below $100 million, your company can promise to pay an annual coupon of up to 5%. However,...

CSL Ltd is considering issuing additional ordinary shares to raise capital for developing and manufacturing a Covid-19 vaccine

CSL Ltd is considering issuing additional ordinary shares to raise capital for developing and manufacturing a Covid-19 vaccine. The company is expected to pay a dividend of $0.50/share at the end of year 4 and dividends will grow at a constant rate of 3% per annum forever. CSL Ltd has a beta of 1.5. Long-term treasury bonds are yielding 4% per annum and the long-term return of the ASX200 (i.e. the market portfolio) is 10% per annum. a) Using...

Abc company has net income of $2 million, a value of $15 million and 500,000 shares...

Abc company has net income of $2 million, a value of $15 million and 500,000 shares o/s. You are planning to use $1.2 million of excess cash to buy back shares. How much will your EPS (earnings per share) increase?

Suppose a large firm seeks to raise capital by issuing a bond at the beginning of...

Suppose a large firm seeks to raise capital by issuing a bond at the beginning of 2017 with a $5,000 face value and $250 coupon payments to be made at the end of 2017, 2018, 2019, and 2020. The corporation will also repay the principle amount of the bond back to investors at the end of 2020\. 1. What is the rate of interest that the firm is paying on its bonds? 2. If Moody’s decides to upgrade the firm’s...

A corporation has a total capital of $10,000,000 by issuing shares of stock worth $6,000,000, and...

A corporation has a total capital of $10,000,000 by issuing shares of stock worth $6,000,000, and by floating bonds worth $4,000,000. If the cost of debt is 8% and cost of equity is 14%, what is the weighted average cost of capital in the absence of corporate tax.

johannesson&johannesson sold 14 million shares of its $5 par common stock to raise capital for a...

johannesson&johannesson sold 14 million shares of its $5 par common stock to raise capital for a voluntary non alcoholic happy hour with affiliated people. Assuming that the issue price is 11$ per share, how should johannesson&johannesson record the sale of the shares

Subjects