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Margarita [4]
3 years ago
15

Deep Hollow Oil issued 135,000 shares of stock last week. The underwriters charged a spread of 8.05 percent in exchange for agre

eing to a firm commitment. The legal and accounting fees amounted to $418,000 and the company incurred $48,000 in indirect costs. The offer price was $33 a share. Within the first hour of trading, the stock price increased to $36 a share. What was the flotation cost as a percentage of the funds raised?
Business
1 answer:
Neporo4naja [7]3 years ago
6 0

Answer:

The ratio of flotation cost to funds raised is 20.13%

Explanation:

First of all, it is noteworthy that actual amount received per share by Deep Hollow Oil is the issue price minus the underwriting spread of $2.6565 (8.05% of $33),in other words the net issue price is $30.3435

The total amount raised is $ 4,096,372.50 (135000*$30.3435 ),while total flotation costs are as follows:

Underwriting costs                    $ 358,627.50  

Legal and accounting fees       $418,000

Indirect costs                              $48,000

Total flotation costs                   $824,627.50  

However, the flotation costs as a percentage of funds raised is given below:

$824,627.50  /$4,096,372.50=20.13%

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Presented below is information related to Lexington Real Estate Agency.
Ber [7]

Answer:

Oct 1

DR Cash............................................................................$20,000

CR Common Stock.........................................................................$20,000

Oct 2. No entry required

Oct 3

DR Office Furniture .....................................................$2,300

CR Accounts Payable................................................................$2,300

Oct 6

DR Accounts Receivable.............................................$3,600

CR Service Revenue - Realty services...................................$3,600

Oct 27

DR Accounts Payable ..................................................$850

CR Cash .......................................................................................$850

Oct 30

DR Salaries Expense ....................................................$2,500

CR Cash ..........................................................................................$2,500

3 0
3 years ago
To make effective decisions in​ today's fast-moving​ world, managers need to​ ________.
Llana [10]
They would need to 'know when to call it quits' 
5 0
3 years ago
An employee in your organization has started to work from home two days a week. The employee uses the same company laptop at the
Lisa [10]

Answer:

Explanation:

From the question we are informed about An employee in my organization who has started to work from home two days a week. The employee uses the same company laptop at the office and at home. The laptop automatically connects to the wireless network in the office, but it does not automatically connect to the employee's home wireless network. The employee would like the laptop to connect automatically both at home and at work. In this case

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8 0
3 years ago
Beridze manufacturing expects to produce​ 2,400 units in january and​ 3,700 units in february. beridze budgets​ $45 per unit for
sladkih [1.3K]
We have that the january units cost 2400*45=108000$. Also, February's cost is going to be 3700*45=166500$. We have that for January, the ending balance needs to be 70% of the stock for February. Hence, it needs to be 70%*166500=116500$. Hence, we will need to pay for the units 108000$ and also 116500$; Thus, the total money that needs to be invested in January is 224500$. However, we already have 37250$, so the total inflow of money is 187250$. Hence, the correct choice is that on January we need 187300$.

(For February, we need to put in 166500$ and also 51800 need to be available at the end of the month. Thus, the total cost needs to be 218300$. However, 116500$ are already available from January. Hence, the total inflow for February is 101800$.
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6 0
3 years ago
Read 2 more answers
Ken just bought a house. He made a $25,000 down payment and financed the balance with a 20-year home mortgage loan with an inter
Rudiy27

Answer:

$163,104

Explanation:

loan principal = monthly payment x PV annuity factor

monthly payment = $950

PV annuity factor, 0.4583%, 240 periods = 145.3726

loan principal = $950 x 145.3726 = $138,104

the price of the house = down payment + loan = $25,000 + $138,104 = $163,104

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3 years ago
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