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Foundations Of Financial Management
Found in: Page 495
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

Solar Energy Corp. has $4million in earnings with 4 million shares outstanding. Investment bankers think the stock can justify P/E ratio of 21. Assume the underwriting spread is 5 percent. What should the price to the public be?

The price to the public will be $22.11.

See the step by step solution

Step by Step Solution

Computation of expected market price per share

Computation of price to the public

Hence, the offer price to the public will be $22.11.

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