ZuoTi.Pro
Question

The Wrigley Corporation needs to raise $29 million. The investment banking firm of Tinkers, Evers &...

The Wrigley Corporation needs to raise $29 million. The investment banking firm of Tinkers, Evers & Chance will handle the transaction.


a. If stock is utilized, 2,100,000 shares will be sold to the public at $15.50 per share. The corporation will receive a net price of $14.00 per share. What is the percentage underwriting spread per share? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Underwriting spread per share 9.68 %

b. If bonds are utilized, slightly over 29,400 bonds will be sold to the public at $1,001 per bond. The corporation will receive a net price of $997 per bond. What is the percentage of underwriting spread per bond? (Relate the dollar spread to the public price.) (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Underwriting spread per bond %

c-1. Which alternative has the larger percentage of spread?
  

  • Stock

  • Bond


c-2. Is this the normal relationship between the two types of issues?
  

  • Yes

  • No

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

*Please rate Thumbs up

0 0
Add a comment
Know the answer?
Add Answer to:
The Wrigley Corporation needs to raise $29 million. The investment banking firm of Tinkers, Evers &...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • The Wrigley Corporation needs to raise $44 million. The investment banking firm of Tinkers, Evers&Chance will...

    The Wrigley Corporation needs to raise $44 million. The investment banking firm of Tinkers, Evers&Chance will handle the transaction. a. If stock is utilized, 2,300,000 shares will be sold to the public at $20.50 per share. The corporation will receive a net price of $19 pe percent rounded to 2 decimal places.) share. What is the percentage underwiting spread per share? (Do not round intermediate calculations. Enter your answer as a Underwriting spread per share b. If bonds are utilized,...

  • The Wrigley Corporation needs to raise $44 million. The investment banking firm of Tinkers, Evers &...

    The Wrigley Corporation needs to raise $44 million. The investment banking firm of Tinkers, Evers & Chance will handle the transaction. If stock is utilized, 2,300,000 shares will be sold to the public at $20.50 per share. The corporation will receive a net price of $19 per share. What is the percentage underwriting spread per share? If bonds are utilized, slightly over 43,700 bonds will be sold to the public at $1,009 per bond. The corporation will receive a net...

  • The Maple Ridge Slugger Bat Company needs to raise $27 million. The investment dealer Walker and...

    The Maple Ridge Slugger Bat Company needs to raise $27 million. The investment dealer Walker and Jenkins will handle the transaction. (Do not round the intermediate calculations. Round the final answers to 2 decimal places.) a. If stock is utilized, 1,900,000 shares will be sold to the public at $16.45 per share. The corporation will receive a net price of $14 per share. What is the percentage of underwriting spread per share? Percentage underwriting spread per share % b. If...

  • The investment banking firm of Einstein & Co. will use a dividend valuation model to appraise...

    The investment banking firm of Einstein & Co. will use a dividend valuation model to appraise the shares of the Modern Physics Corporation. Dividends (D1) at the end of the current year will be $1.30. The growth rate (g) is 9 percent and the discount rate (Ke) is 14 percent. a. What should be the price of the stock to the public? (Do not round intermediate calculations and round your answer to 2 decimal places.) Price of the stock b....

  • The investment banking firm of Einstein & Co. will use a dividend valuation model to appraise...

    The investment banking firm of Einstein & Co. will use a dividend valuation model to appraise the shares of the Modern Physics Corporation. Dividends (D1) at the end of the current year will be $1.60. The growth rate (g) is 8 percent and the discount rate (K2) is 11 percent a. What should be the price of the stock to the public? (Do not round intermediate calculations and round your answer to 2 decimal places.) Price of the stock b....

  • Richmond Rent-A-Car is about to go public. The investment banking firm of Tinkers, Evers & Chance...

    Richmond Rent-A-Car is about to go public. The investment banking firm of Tinkers, Evers & Chance is attempting to price the issue. The car rental industry generally trades at a 10 percent discount below the P/E ratio on the Standard & Poor's 500 Stock Index. Assume that index currently has a P/E ratio of 20. The firm can be compared to the car rental industry as follows: Car Rental Industry 10% Richmond Growth rate in earnings per share Consistency of...

  • Moonscape has just completed an initial public offering. The firm sold 1 million shares at an...

    Moonscape has just completed an initial public offering. The firm sold 1 million shares at an offer price of $10 per share. The underwriting spread was $0.60 a share. The price of the stock closed at $16.00 per share at the end of the first day of trading. The firm incurred $200,000 in legal, administrative, and other costs. What were flotation costs as a fraction of funds raised? (Do not round intermediate calculations. Enter your answer as a percent rounded...

  • Moonscape has just completed an initial public offering. The firm sold 4 million shares at an...

    Moonscape has just completed an initial public offering. The firm sold 4 million shares at an offer price of $12 per share. The underwriting spread was $0.40 a share. The price of the stock closed at $18.00 per share at the end of the first day of trading. The firm incurred $400,000 in legal, administrative, and other costs. What were flotation costs as a fraction of funds raised? (Do not round intermediate calculations. Enter your answer as a percent rounded...

  • The Scandrick Corporation needs to raise $73 million to finance its expansion into new markets. The...

    The Scandrick Corporation needs to raise $73 million to finance its expansion into new markets. The company will sell new shares of equity via a general cash offering to raise the needed funds. If the offer price is $70 per share and the company's underwriters charge a spread of 8 percent, how many shares need to be sold? (Do not round Intermediate calculations and enter your answers in shares, not millions of shares, rounded to the nearest whole number, e.g.,...

  • The Elkmont Corporation needs to raise $63.8 million to finance its expansion into new markets. The...

    The Elkmont Corporation needs to raise $63.8 million to finance its expansion into new markets. The company will sell new shares of equity via a general cash offering to raise the needed funds. The offer price is $22 per share and the company's underwriters charge a spread of 7.5 percent. How many shares need to be sold?(Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to the nearest whole number, e.g., 1,234,567.) Number of shares...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT