Ex-rights price = [market value of equity + (number of new shares * price per share)] / (number of initial shares + number of new shares)
a). Ex-rights price = [$22,695,000 + (64,000 * $89)] / (255,000 + 64,000)
= $28,391,000 / 319,000 = $89
The effect = new price - initial price = $89 - $89 = $0
So, there is no change in price.
b). Ex-rights price = [$22,695,000 + (64,000 * $83)] / (255,000 + 64,000)
= $28,007,000 / 319,000 = $87.80
The effect = new price - initial price = $87.80 - $89 = -$1.20
So, there is a decline in price by $1.20.
c). Ex-rights price = [$22,695,000 + (64,000 * $77)] / (255,000 + 64,000)
= $27,623,000 / 319,000 = $86.59
The effect = new price - initial price = $86.89 - $89 = -$2.41
So, there is a decline in price by $2.41.
Nemesis, Inc., has 255,000 shares of stock outstanding. Each share is worth $89, so the company's...
Problem 15-8 Price Dilution [LO3] Nemesis, Inc., has 255,000 shares of stock outstanding. Each share is worth $89, so the company's market value of equity is $22,695,000. Suppose the firm issues 64,000 new shares at the following prices: $89, $83, and $77. (8 01:57:19 What will be the ex-rights price and the effect of each of these alternative offering prices on the existing price per share? (Leave no cells blank; if there is no effect select "No change" from the...
Nemesis, Inc., has 210,000 shares of stock outstanding. Each share is worth $80, so the company’s market value of equity is $16,800,000. Suppose the firm issues 46,000 new shares at the following prices: $80, $74, and $68. What will be the ex-rights price and the effect of each of these alternative offering prices on the existing price per share? (Leave no cells blank; if there is no effect select "No change" from the dropdown and enter "0". Round your answers...
Problem 15-8 Price Dilution [LO3] Nemesis, Inc., has 215,000 shares of stock outstanding. Each share is worth $81, so the company's market value of equity is $17,415,000. Suppose the firm issues 48,000 nev shares at the following prices: $81, $75, and $69. What will be the ex-rights price and the effect of each of these alternative offering prices on the existing price per share? (Leave no cells blank; if there is no effect select "No change" from the dropdown and...
Problem 15-8 Price Dilution [LO3] 2 Nemesis, Inc., has 235,000 shares of stock outstanding. Each share is worth $85, so the company's market value of equity is $19,975,000. Suppose the firm issues 56,000 new shares at the following prices: $85, $79, and $73. 01:53:13 What will be the ex-rights price and the effect of each of these alternative offering prices on the existing price per share? (Leave no cells blank; if there is no effect select "No change" from the...
Crawford, Inc., has 115,000 shares of stock outstanding. Each share is worth $44, so the company's market value of equity is $5.060,000. Suppose the firm issues 20.000 new shares at the following prices: $44. $41, and $36. What will the effect be of each of these alternative offering prices on the existing price per share? (Do not round Intermediate calculations and round your answers to 2 decimal places, e.g.. 32.16. Leave no cells blank: If there is no effect select...
Crawford, Inc., has 105,000 shares of stock outstanding. Each share is worth $72, so the company's market value of equity is $7,560,000. Suppose the firm issues 20,000 new shares at the following prices: $72, $69, and $64. What will the effect be of each of these alternative offering prices on the existing price per share? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. Leave no cells blank; if there is no effect select...
Crawford, Inc., has 135,000 shares of stock outstanding. Each share is worth $71, so the company's market value of equity is $9.585,000. Suppose the firm Issues 15,000 new shares at the following prices: $71, $68, and $63. What will the effect be of each of these alternative offering prices on the existing price per share? (Do not round Intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. Leave no cells blank; If there is no effect select...
Crawford, Inc., has 135,000 shares of stock outstanding. Each share is worth $71, so the company's market value of equity is $9,585,000. Suppose the firm issues 15,000 new shares at the following prices: $71, $68, and $63. What will the effect be of each of these alternative offering prices on the existing price per share? (Do not round Intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. Leave no cells blank; If there is no effect select...
Cye, Inc., has 110,000 shares of stock outstanding. Each share is worth $41, so the company’s market value of equity is $4,510,000. Suppose the firm issues 19,000 new shares at the following prices: $41, $38, and $33. What will be the ex-rights price and the effect of each of these alternative offering prices on the existing price per share? (Leave no cells blank; if there is no effect select "No change" from the dropdown and enter "0". Round your answers...
Cye, Inc., has 110,000 shares of stock outstanding. Each share is worth $41, so the company’s market value of equity is $4,510,000. Suppose the firm issues 19,000 new shares at the following prices: $41, $38, and $33. What will be the ex-rights price and the effect of each of these alternative offering prices on the existing price per share? (Leave no cells blank; if there is no effect select "No change" from the dropdown and enter "0". Round your answers...