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River Cruises is all-equity-financed

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Question

River Cruises is all-equity-financed.

 Current Data    
  Number of shares 100,000       
  Price per share$10       
  Market value of shares$1,000,000       
 State of the Economy
 
 Slump NormalBoom
  Profits before interest$70,750  116,500  178,000 
Suppose it now issues $250,000 of debt at an interest rate of 10% and uses the proceeds to repurchase 25,000 shares. Assume that the firm pays no taxes and that debt finance has no impact on firm value. Refer to the above table to compute the missing data. (Do not round intermediate calculations. Round “Earnings per share” to 3 decimal places. Enter “Return on shares” as a percent rounded to 2 decimal places.)
 Outcomes  
  Number of shares           
  Price per share$10           
  Market value of shares$            
  Market value of debt$            
State of the Economy
 
    Slump   Normal   Boom
  Profits before interest$70,750        $116,500        $178,000        
  Interest$         $         $         
  Equity earnings$         $         $         
  Earnings per share$         $         $         
  Return on shares %     %     %    
  Expected Outcome 
 
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share

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Question

Young Corporation stock currently sells for $30 per share. There are 1 million shares currently outstanding. The

company announces plans to raise $4 million by offering shares to the public at a price of $30 per share.

a.If the underwriting spread is 5%, how many shares will the company need to issue in order to be left with net proceeds of $4 million? (Do not round intermediate calculations. Round your answer to the nearest whole number.)
  Number of shares  
b.If other administrative costs are $50,000, what is the dollar value of the total direct costs of the issue? (Enter your answer in dollars not in millions. Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.)
  Total direct costs$   
c.If the share price falls by 4% at the announcement of the plans to proceed with a seasoned offering, what is the dollar cost of the announcement effect? (Enter your answer in dollars not in millions.)
  Cost of the announcement effect$   
 
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Moonscape has just completed an initial public offering

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Question

Moonscape has just completed an initial public offering. The firm sold 2 million shares at an offer price of $10

per share. The underwriting spread was $.70 a share. The price of the stock closed at $13 per share at the end of the first day of trading. The firm incurred $500,000 in legal, administrative, and other costs. What were flotation costs as a fraction of funds raised? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 
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The shareholders of the Pickwick Paper Company need to elect six directors

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Question

The shareholders of the Pickwick Paper Company need to elect six directors. There are 150,000 shares

outstanding.

a.What is the minimum number of shares you need to own to ensure that you can elect at least one director if the company has majority voting?
  Number of shares  
b.What is the minimum number of shares you need to own to ensure that you can elect at least one director if the company has cumulative voting? (Round your answer to the nearest whole number.)
  Number of shares
 
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