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OleMash [197]
3 years ago
10

An investment banker agrees to underwrite an issue of 10 million shares of stock for TWResearch, Inc. on a firm commitment basis

. The investment banker pays $10.50 per share to TWResearch, Inc. for the 10 million shares of stock. It then sells those shares to the public for $11.20 per share. If the investment bank can sell the shares for $9.75 per share, what is the profit (loss) to the investment banker?
Business
2 answers:
Mrac [35]3 years ago
7 0

Answer:

$ 7.5 million

Explanation:

The investment bank will have a loss which = ( 9.75 - 10.50 ) × 10 million = $ - 7.5 million

Ierofanga [76]3 years ago
5 0

Answer:

= -$7,500,000 (the investment bank makes a loss of $7,500,000)

Explanation:

Step 1: Determine the profit or loss of the investment bank if it sells the shares for $11.2 per share

Agreed amount to pay to TWResearch =

$10.5 x 10,000,000= $105,000,000

Investment bank' profit = (11.2- 10.5) x 10 000 000 = $7,000,000

Step 2: However, since the investment bank can only sell the shares for $9.75, then the calculations will be as follows:

a) Agreed amount to pay to TWResearch =

$10.5 x 10,000,000= $105,000,000

b) Based on a selling price of $9.75

The profit or loss to the investment bank = the amount it sold the shares - the amount it bought the shares from the firm.

= ($9.75- $10.5) x 10 000 000

= 0.75 x 10000000

= -$7,500,000 (the investment bank makes a loss of $7,500,000)

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viva [34]

Answer:

a. 863

Explanation:

Calculation for the order quantity

Order quantity = 75 x (10 + 2) + (1.64 x 8) - 50

Order quantity = (75 x 12) + (1.64 x 8) - 50

Order quantity= 900 + 13.12 - 50

Order quantity= 863.12

Order quantity = 863

Therefore the Order quantity will be 863

8 0
3 years ago
Sankey Co. has earnings per share of $3.95. The benchmark PE is 18.8 times. What stock price would you consider appropriate
trapecia [35]

Answer:

Stock price = $74.26

Explanation:

<em>The value of a share can be determined using the price earning ratio model. According to this model, the price of a share is estimated as the EPS of the company multiplied by a representative (benchmark) price- earning (P/E) ratio</em> .

The  ratio relates the price of a stock to its earning. A stock with a higher P/R indicates a high potent for growth.

Price of stock =Earnings per share( EPS) × benchmark P/E ratio  

The appropriate comparative price earnings ratio in the question has been given as 18.8 times.

DATA-

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PE- 18.8

Stock price = 3.95 ×  18.8= $74.26

Stock price = $74.26

7 0
3 years ago
David Segal started a business. During the first month (October 20--), the following transactions occurred.
zloy xaker [14]

Answer:

Assets = Liabilities + Owner’s Equity (Capital – Drawing + Revenues – Expenses) = $17,017

Explanation:

Note: See the attached xlsx file for the effect of each transaction on the individual accounts of the expanded accounting equation and the report of the total of each element.

In the attached xlsx file, transaction (c) is treated in such a way that the insurance for the month of October 20—is accounted for under the following:

Prepaid Insurance = One-year insurance premium - (One-year insurance premium / Number of months in a year) = $1,000 - ($1,000 / 12) = $1,000 - $83 = $917

Expenses = One-year insurance premium / Number of months in a year = $1,000 / 12 = $83

Download xlsx
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2 years ago
True Corporation, a wholly owned subsidiary of Trumaine Corporation, generated a $400,000 taxable loss in its first year of oper
Dafna1 [17]

Answer:

a. The overall state income tax for the unitary group is $60,474

b. The aggregate state income tax for the entities if they were non-unitary is $110,000

c. The aggregate state income tax for the entities if they were non-unitary-overall state income tax for the unitary group is $49,253

Explanation:

a. In order to calculate the overall state income tax for the unitary group we would have to make the following calculation:

overall state income tax for the unitary group=state A income tax+ state B income tax

state A income tax=state taxable income*tax rate

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tax rate=8%

Therefore, state A income tax=$184,200*8%

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state B income tax=state taxable income*tax rate

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state taxable income=$415,800

tax rate=11%

Therefore, state B income tax=$415,800*11%

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Therefore, overall state income tax for the unitary group=$14,736+$45,738

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The overall state income tax for the unitary group is $60,474

b. In order to calculate the aggregate state income tax for the entities if they were non-unitary we would have to make the following calculation:

aggregate state income tax for the entities if they were non-unitary=aggregate state income tax state A+aggregate state income tax state B

aggregate state income tax state A=0

aggregate state income tax state B=$1,000,000*11%

aggregate state income tax state B=$110,000

Therefore, aggregate state income tax for the entities if they were non-unitary=0+$110,000

aggregate state income tax for the entities if they were non-unitary=$110,000

The aggregate state income tax for the entities if they were non-unitary is $110,000

c. The aggregate state income tax for the entities if they were non-unitary-overall state income tax for the unitary group=$110,000-$60,474

The aggregate state income tax for the entities if they were non-unitary-overall state income tax for the unitary group=$49,253

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