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mr Goodwill [35]
3 years ago
5

Beedles Inc. needed to raise $14 million in an IPO and chose Security Brokers Inc. to underwrite the offering. The agreement sta

ted that Security Brokers would sell 3 million shares to the public and provide $14 million in net proceeds to Beedles. The out-of-pocket expenses incurred by Security Brokers in the design and distribution of the issue were $220,000. What profit or loss would Security Brokers incur if the issue were sold to the public at the following average price
Business
1 answer:
Elis [28]3 years ago
3 0

Answer:

a. Profit = $780,000

b. Profit = $3,780,000

c. Loss = $2,220,000

Explanation:

Note: This question is not complete. The complete question is therefore provided before answering the question as follows:

Beedles Inc. needed to raise $14 million in an IPO and chose Security Brokers Inc. to underwrite the offering. The agreement stated that Security Brokers would sell 3 million shares to the public and provide $14 million in net proceeds to Beedles. The out-of-pocket expenses incurred by Security Brokers in the design and distribution of the issue were $220,000. What profit or loss would Security Brokers incur if the issue were sold to the public at the following average price

a. $5 per share

b. $6 per share

c. $4 per share

The explanation of the answer is now given as follows:

The profit or loss can be calculated using the following formula:

Profit or loss = Sales proceed - Net proceeds to Beedles - Out-of-pocket expenses incurred by Security Brokers ........... (1)

Where;

Sales proceed = Average price * Number of shares = Average price per share * 3,000,000

Net proceeds to Beedles = 14,000,000

Out-of-pocket expenses incurred by Security Brokers = $220,000

We can proceed as follows:

a. profit or loss at average price $5 per share

Substituting all the values into equation (1), we have:

Profit or loss = ($5 * 3,000,000) - $14,000,000 - $220,000 = $780,000 profit

b. profit or loss at average price $6 per share

Substituting all the values into equation (1), we have:

Profit or loss = ($6 * 3,000,000) - $14,000,000 - $220,000 = $3,780,000  profit

c. profit or loss at average price $4 per share

Substituting all the values into equation (1), we have:

Profit or loss = ($4 * 3,000,000) - $14,000,000 - $220,000 = -$2,220,000 loss

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ABC Corporation has 2.8 million shares of stock outstanding. The stock currently sells for $50 per share. The firm’s debt is pub
Hoochie [10]

Answer:

13.38%

Explanation:

The formula to compute WACC is shown below:

= Weightage of debt × cost of debt × ( 1- tax rate) + (Weightage of  common stock) × (cost of common stock)

where,  

Market value of equity = 2,800,000 × $50 = $140,000,000

Market value of debt = 10,000,000 × 95% = $9,500,000

Weighted of debt = Debt ÷ total firm

The total firm includes debt, preferred stock, and the equity which equals to

=  $140,000,000 + $9,500,000

= $149,500,000

So, Weighted of debt = ($9.5 million ÷ $149.50 million) = 0.0635

And, the weighted of common stock = (Common stock ÷ total firm)

                                                              = $140 million ÷ $149.50 million

                                                              = 0.9364        

And, the cost of equity = risk free rate of return + Beta × market risk premium

= 5% + 1.25 × 7%

= 5% + 8.75%

= 13.75%      

Now put these values to the above formula  

So, the value would equal to

= ( 0.0635 × 12%) × ( 1 - 35%) +  (0.9364 × 13.75%)

= 0.4953 + 12.88%

= 13.372%

7 0
3 years ago
A small apartment property is estimated to have potential gross income of $ 25,000. Vacancy and collection losses are expected t
Bezzdna [24]

Answer:

the market value of the property would be $138,542.

Explanation:

To calculate the market value of the property , we need to divide the net operating income by the capitalization rate, in the question we have been given the capitalization rate but the operating income is not available to us. So with the help of given potential gross income we will calculate the effective gross income and then from it we will calculate the net operating income, lets see how to do step wise calculation -

POTENTIAL GROSS INCOME - $25,000

(-) VACANCY AND COLLECTION LOSSES = 5% X $25,000

                                                                       = $1250

EFFECTIVE GROSS INCOME  = $23,750

Now from this we will subtract the operating expenses to get net operating income -

EFFECTIVE GROSS INCOME = $23,750

(-) OPERATING EXPENSES  = 30% X $23,750

                                              = $7125

NET OPERATING INCOME = $16,625

Now for calculating market value putting these value sin the formula -

NET OPERATING INCOME / MARKET CAPITALIZATION RATE

= $16,625 / 12%

= $138,541.66

= $138,542 ( APPROXIMATELY )

7 0
3 years ago
The primary advantage an entrepreneur gains by leasing rather than buying facilities is
gregori [183]
<span> a decrease in investment risk.</span>
5 0
3 years ago
Wildhorse Corp. has total current assets of $12,152,000, current liabilities of $5,849,000, and a quick ratio of 0.94. How much
White raven [17]

Answer:

Wildhorse Corp. has inventory of $6,653,940

Explanation:

The quick ratio is a liquidity ratio that indicates a company's ability to pay its current liabilities when they come due without needing to sell its inventory or get additional financing. The quick ratio is calculated by the following formula:

Quick ratio = (Cash & equivalents + Short Term investments + Accounts receivable)/Current Liabilities

(Cash & equivalents + Short Term investments + Accounts receivable) = Quick ratio x Current Liabilities = 0.94 x $5,849,000 = $5,498,060

Inventory = Total current assets - (Cash & equivalents + Short Term investments + Accounts receivable) = $12,152,000 - $5,498,060 = $6,653,940

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When Zappos focused on aligning and maximizing customer service, distribution, product selection, and other key areas, they were
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Answer:

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Explanation:

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