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Viktor [21]
3 years ago
12

DRK, Inc., has just sold 110,000 shares in an initial public offering. The underwriter’s explicit fees were $66,000. The offerin

g price for the shares was $60, but immediately upon issue, the share price jumped to $66.00. a. What is the total cost to DRK of the equity issue?
Business
1 answer:
iris [78.8K]3 years ago
4 0

Answer: $726000

Explanation:

Based on the information given in the question, the total cost to DRK of the equity issue will be calculated thus:

Firstly, we'll calculate the implicit cost per share which will be:

= Increased price - Offering price

= $66 - $60

= $6

Then, the total implicit cost will be:

= $6 × 110000

= $660000

Then, the total cost to DRK of the equity issue will be:

= Explicit cost + Implicit cost

= $66000 + $660000

= $726000

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A change in the asset turnover ratio from 1.3 to 1.6 would indicate a. a decrease in the effectiveness of assets in producing sa
Zarrin [17]

Answer:

a decrease in the effectiveness of assets in producing sales by a favorable trend in using assets to generate sales.

Explanation:

Assets turnover ratio = \frac{Net Sales}{Average assets}

Therefore when the ratio increases it means the level of sales has increased, with a higher rate than earlier.

Now also with this it reflects that the effectiveness of assets in producing sales as by a favorable trend, as higher the ratio more favorable it is, as depicts higher sales.

7 0
3 years ago
Suppose you purchase one share of the stock of Red Devil Corporation at the beginning of year 1 for $42.50. At the end of year 1
kkurt [141]

Answer:

17.76%

Explanation:

The computation of the time-weighted return on your investment is given below

But before that we have to do the following calculations

Year 1 = ($46.50 - $42.50) + 2 ÷ ($42.50) × 100 = 14.12%

Year 2 = ($54.50 - $46.50) + 2 ÷ ($46.50) × 100 = 21.51%

Now the time weighted return is

(1 + t)^2 = (1 + 14.12%) × (1 + 21.51%)

= 1.1412 × 1.2151

= √1.3867 - 1

= 17.76%

8 0
3 years ago
Addison Co. budgets production of 2,790 units during the second quarter. Other information is as follows: Direct labor Each fini
Doss [256]

Answer and Explanation:

1. The preparation of direct labor budget is given below:-

Direct labor budget

Units to be produced              2,790

Hours required per unit          5

Total labor hours needed 13,950

(2,790 × 5)

Labor rate per hour                $10

Direct labor budget               $139,500

(13,950 × $10)

2. The preparation of factory overhead budget is given below:-

Total labor hours needed                 13,950

Variable overhead rate per hour       $12

Budgeted variable overheads           $167,400

(13,950 × $12)

Budgeted Fixed overheads              $580,000

Budgeted total overheads                $747,400

8 0
3 years ago
If the insurer offers to renew the policy on different terms, how long does the policyholder have to cancel the policy without b
kakasveta [241]

Answer:

30 days after receiving notice of the changes

Explanation:

If the insurer offers to renew the policy on different terms, how long does the policyholder have to cancel the policy without being penalized?

An insurer is defined as- a person or company that underwrites an insurance risk; the party in an insurance contract agrees to pay compensation. Generally, the term insurer is synonymous  with the term insurance provider or insurance company.

A policyholder is a person who buys an insurance policy. The policyholder is protected by the details in the insurance policy. He or she can add more persons to the policy depending on the type.

In most cases, a policyholder is allowed to cancel the policy within 30 days without been penalized for a short rate cancellation fee.

4 0
3 years ago
Sub-prime loan company is thinking of opening a new office, and the key data are shown below.
Nookie1986 [14]
To complete the above question, please see below:

Sub-Prime Loan Company is thinking of opening a new office, and the key data are shown below. The company owns the building that would be used, and it could sell it for $100,000 after taxes if it decides not to open the new office. The equipment for the project would be depreciated by the straight-line method over the project's 3-year life, after which it would be worth nothing and thus it would have a zero salvage value. No change in net operating working capital would be required, and revenues and other operating costs would be constant over the project's 3-year life. What is the project's NPV? (Hint: Cash flows are constant in Years 1-3.) 

<span>WACC 10.0% </span>
<span>Opportunity cost $100,000 </span>
<span>Net equipment cost (depreciable basis) $65,000 </span>
<span>Straight-line depreciation rate for equipment 33.333% </span>
<span>Annual sales revenues $123,000 </span>
<span>Annual operating costs (excl. depreciation) $25,000 </span>
<span>Tax rate 35%
</span>
The answer is <span>12,271</span>
5 0
3 years ago
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