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Foundations Of Financial Management
Found in: Page 496
Foundations Of Financial Management

Foundations Of Financial Management

Book edition 16th
Author(s) Stanley B. Block, Geoffrey A. Hirt, Bartley Danielsen
Pages 768 pages
ISBN 9781259277160

Short Answer

Trump Card Co. will issue stock at a retail (public) price of $32. The company will receive $29.20 per share.

a. What is the spread on the issue in the percentage terms?

b. If the firm demands receiving a new price only $2.20 below the public price suggested in part a, what will the spread be in percentage terms?

c. To hold the spread down to 2.5 percent based on the public price in part a, what net amount should Trump Card Co. receive?

a. Percentage spread on the issue of stock is 8.75%.

b. New percentage spread is 6.875%

c. Net amount that should be received by the company is $31.20.

See the step by step solution

Step by Step Solution

Computation of spread percentage

Computation of new spread

Computation of net amount

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