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Radda [10]
3 years ago
5

Devine Linens (DL) must raise $14,000,000 to support future growth. If it raises the funds by issuing stock, DL must pay an inve

stment banker 5 percent of the total amount issued plus $250,000 in other costs associated with the issue. What is the amount of stock that DL must issue to net $14,000,000 after flotation costs?
A. $14,962,500B. $14,950,000C. $14,737,092D. $15,000,000E. $13,537,500
Business
1 answer:
blsea [12.9K]3 years ago
5 0

Answer:

D. $15,000,000

Explanation:

amount to be raised before 5%cost = $14,000,000 + $250,000

                                                            =$14,250,000

then:

100 - 5 = 95%         ~~     $14,250,000

100%                       ~~      $ 15,000000

Therefore, the amount required to be raised is $15,000,000.

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Xyz inc. has total debt ratio of 0.62. calculate the company's equity multiplier.
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Therefore, the equity multiplier of XYZ inc is given by 1 + 0.62 = 1.62
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Everything else held constant, an increase in the excess reserves ratio causes the m1 money multiplier to ________ and the money
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The M1 money multiplier decreases and the money supply decreases when the required reserve ratio on checkable deposits rises, all else being equal.

<h3>What is the reserve ratio?</h3>

The percentage of deposits that commercial banks must retain in cash under the guidance of the central bank is known as the cash reserve ratio.

<h3>How is reserve ratio determined?</h3>
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  • The calculation for a bank can be obtained by dividing the bank deposits by the cash reserve held with the central bank, and it is expressed as a percentage.
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4 0
2 years ago
Assume that you are a consultant to Lotte Inc., and you have been provided with the following data: D1 = $0.67; P0 = $27.50; and
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The cost of equity from retained earnings based on the DCF approach=9.44%

Explanation:

  • The cost of equity from retained earnings based on the DCF approach can be calculated as follows,
  • For D1  = $0.67
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  • For  g = 7.00%
  • Therefore, rs = \frac{D1}{PO} + g
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8 0
3 years ago
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