Question

Which of the following actions will best enable a company to raise additional equity capital? RAX House is a private company considering going public. PAX House has assets of $585 million and liabilities of $415 milion After the IPO, RAX House will have 120 million shares outstanding. The industry average book value per share is 23. The company estimates the IPO price using the industry average multiples. The closing price of the first day trading in the market is $3.90. What is the level of IPO underpricing? Select one a. Initiate a stock repurchase program b. Begin a new stock dividend reinvestment plan c. Begin an open-market purchase dividend reinvestment plan d. Declare a stock split Select one a. 9.16% b. 11.26% c. Cannot be calculated d. 19.69% Warren Supply inc. is evaluating its capital budget. The company finances with debt and common equity, but because of market conditions, wants to avoid issuing any new common stock during the coming year it is forecasting an EPS of $3.75 for the coming year on its 600,000 outstanding shares of stock its capital budget is forecasted at $300,000, and it is committed to maintaining a $250 dividend per share. Given these constraints, what percentage of the capital budget must be financed with debt? Larsen Films is analyzing its cost structure, its fixed operating costs are $600,000, its variable costs of $3.00 per unit produced and its products sell for $4 16 per unit What is the company's breakeven point in amount? Select one a $1.793,103 45 b. $1,790,103 45 c None of the above Select one 2.6508 b. None of the options Cannot be determined d. 6.254 d. $1,793,542 45 Which of the following statements is CORRECT? Brinkley Resources stock has created significantly over the last five years, seling now for $125 per share Management feels this price is too high for the average Investor and wants to get the price down to a more typical level, which it thinks is $25 per share. What stock split would be required to get to this price, assuming the transaction has no effect on the total market value? Put another way, how many new shares should be oven per one old share? Select one Select one a. The Miller model begins with the MM model without corporate taxes and then adds personal taxes b. The MM model with corporate taxes is the same as the Miller model, but with negative personal taxes c. The Miller model begins with the MM model with corporate taxes and then adds personal taxes dhe MM model with corporate taxes is the same as the Miller model but with positive personal taxes b.51 c. None of the options d. Cannot be determined