Left Turn, Inc., has 75,000 shares of stock outstanding. Each share is worth $80, so the...

Left Turn, Inc., has 75,000 shares of stock outstanding. Each share is worth $80, so the company's market value of equity is $6,000,000. Required: (a) Suppose the firm issues 15,000 new shares at the price of $80, what will the effect be of this offering price on the existing price per share? (Do not round your intermediate calculations.) (b) Suppose the firm issues 15,000 new shares at the price of $74, what will the effect be of this offering price on the existing price per share? (Do not round your intermediate calculations.) (c) Suppose the firm issues 15,000 new shares at the price of $61, what will the effect be of this offering price on the existing price per share? (Do not round your intermediate calculations.)

Solutions

Expert Solution

FIRST ANSWER : NO CHANGE.

SECOND ANSWER : DECREASE OF $1.00

THIRD ANSWER : DECREASE OF $3.17.

jeff jeffy answered 1 year ago

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