Question

In: Finance

ABC, an unlevered company is issuing rights shares to its shareholders. Consider the following information: Number...

ABC, an unlevered company is issuing rights shares to its shareholders.
Consider the following information:
Number of right issue (shares)            108,472.0
Subscription price (per share)                       9.0
Exisiting number of shares outstanding            970,102.0
Right-on (before right issue) market value per share                     11.0
i. What is market value of the company before right issue?
ii. What is the market value of the company after right issue?
iii. What will be total number of outstanding shares after right issue?
iv. What will be the market value per share after right issue?
v. What is the value of a right?

Solutions

Expert Solution

jeff jeffy answered 3 years ago
Next > < Previous

Related Solutions

CVP – ABC Company The following information pertains to ABC Company and its product – Product...
CVP – ABC Company The following information pertains to ABC Company and its product – Product Z: Selling Price per unit. $45.00 Direct Material Cost per kg $2.00 Direct Labour Cost per unit $1.20 Variable Overhead cost per unit $0.80 Material required per unit. 2KGS Other variable expenses per unit. $0.60 Annual Fixed Costs: Advertising. $15,000 Fixed Manufacturing. $60,000 Other Fixed Expenses. $8,000 Required: What is the Breakeven Point in both units and sales dollars? For this you will need...
ABC Inc currently has 500,000 shares outstanding at $44 each. The company is proposing a rights...
ABC Inc currently has 500,000 shares outstanding at $44 each. The company is proposing a rights offering with subscription price set at $35. Shareholders will need to have four rights to exercise their right to buy each new share. I. What is the new market value of the company after the rights issue? II. What is the value of each right? What is the ex-rights price of shares? III. ABC managers want the ex-rights price to be $42.80. What should...
ABC Inc currently has 500,000 shares outstanding at $44 each. The company is proposing a rights...
ABC Inc currently has 500,000 shares outstanding at $44 each. The company is proposing a rights offering with subscription price set at $35. Shareholders will need to have four rights to exercise their right to buy each new share. I. What is the new market value of the company after the rights issue? II. What is the value of each right? What is the ex-rights price of shares? III. ABC managers want the ex-rights price to be $42.80. What should...
What is a right? How are rights created? Suppose you own 100 shares of ABC Company,...
What is a right? How are rights created? Suppose you own 100 shares of ABC Company, which has just announced a rights offering. You will be able to purchase one share of common stock at $20 a share plus four rights. The current market price of the stock is $25 a share. What will each right be worth after the rights are issued and begin trading? Is it to your advantage to: a) sell the rights, b) use the rights...
ABC Incorporated started its business on Jan 1st 2012, issuing 100,000 shares for $2 each. Par...
ABC Incorporated started its business on Jan 1st 2012, issuing 100,000 shares for $2 each. Par value of each share was $0.10. The following is the relevant information for the year ending 2012. On Jan 1st, 2012, the company purchased a two-year fire insurance policy for $10,000 and paid it with cash. In 2012, the company purchased office supplies worth $20,000 cash. All these supplies are used up in 2012. Purchased equipment for $50,000 using a short-term loan on Apr...
ABC Company began operations in January, 2021, by issuing 9,100 shares of 8%, cumulative, $85 par...
ABC Company began operations in January, 2021, by issuing 9,100 shares of 8%, cumulative, $85 par value preferred stock and 16,000 shares of $15 par value common stock. ABC Company paid $11,000 of dividends in 2021, they paid $63,000 of dividends in 2022, and they paid $53,000 of dividends in 2023. Calculate the total amount of dividends that ABC Company must pay in 2024 in order to pay its common stockholders a dividend of $3 per share.
Consider the following stock information (price and number of shares outstanding): Stock G Stock A Stock...
Consider the following stock information (price and number of shares outstanding): Stock G Stock A Stock Q P0 $70 $85 $105 Q0 200 500 300 P1 $84 $81 $110 Q1 200 500 300 P2 $20 $85 $24 Q2 800 500 1500 1. Based on the information given, for a price-weighted index of the three stocks calculate: 1.1. the rate of return for the first period (t=0 to t=1). Interpret your answer. 1.2. the value of the divisor in the second...
Consider the following stock price and shares outstanding information. Consider the following stock price and shares...
Consider the following stock price and shares outstanding information. Consider the following stock price and shares outstanding information. DECEMBER 31, Year 1 DECEMBER 31, Year 2 Price Shares Outstanding Price Shares Outstanding Stock K $19 100,000,000 $28 100,000,000 Stock M 76 2,400,000 40 4,800,000a Stock R 44 25,000,000 49 25,000,000 aStock split two-for-one during the year. Compute the beginning and ending values for a price-weighted index and a market-value-weighted index. Assume a base value of 100 and Year 1 as...
Consider the following information on put and call options for company ABC (Show calculations and brief...
Consider the following information on put and call options for company ABC (Show calculations and brief discuss ) Strike Price Put Price Call Price $32.50 $2.85 $1.65 Calculate the net value of a protective put position at a stock price at expiration of $20, and a stock price at expiration of $45. Calculate the net value of a covered call position at a stock price at expiration of $20, and a stock price at expiration of $45. Calculate the payoffs...
ABC Corporation had the following shareholders’ equity balances at January 1, 2020: Common shares, unlimited authorized,...
ABC Corporation had the following shareholders’ equity balances at January 1, 2020: Common shares, unlimited authorized, 400,000 issued                                       $800,000 Retained earnings                                                                                             120,000                      Accumulated other comprehensive income                                                                30,000 The following events occurred in 2020: Issued 50,000 common shares for $150,000 cash. Declared and paid cash dividends of $25,000. Reported net income of $40,000. Reported other comprehensive income of $10,000. At the end of the year, the fair market value of common shares was $5/share. Completed a 2:1 stock-split. Required: Prepare...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT