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Question
Sherpa Movers has just gone public. Under a firm commitment agreement, the firm received $34.40 for each of the 3.5 million shares sold. The initial offering price was $37 per share, and the stock rose to $43 per share in the first few minutes of trading. Sherpa Movers paid $896,000 in legal and other direct costs and $225,000 in indirect costs. What was the flotation cost as a percentage of the funds raised?
A. 22.91 percent
B. 23.85 percent
C. 24.49 percent
D. 26.17 percent
E. 28.60 percent
Answer
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Related questions
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Which one of the following statements is correct?
A. If a firm decreases its inventory period, its accounts receivable period will also decrease.
B. The longer the cash cycle, the more cash a firm typically has available to invest.
C. A firm would prefer a negative cash cycle over a positive cash cycle.
D. Decreasing the inventory period will also decrease the payables period.
E. Both the operating cycle and the cash cycle must be positive values.
Q:
Suppose that Martin Metal Products changes its policy and starts requiring all of its customers to pay within 20 days rather than the 30 days that it currently allows. Which one of the following will result from this change?
A. Increase in receivables period
B. Increase in inventory period
C. Decrease in cash cycle
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B. Hardware store
C. Furniture store
D. Locomotive manufacturer
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A. Toy store
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C. Local restaurant
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Which one of the following statements is true, all else constant?
A. A decrease in the accounts receivable turnover rate decreases the cash cycle.
B. Paying a supplier within the discount period, rather than waiting until the end of the normal credit period, will decrease the cash cycle.
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Q:
Which one of the following is a use of cash?
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B. Paying a supplier for inventory you purchased last month
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Q:
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Q:
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B. The only difference between a term loan and a private placement is the size of the issue.
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D. The flotation costs of issuing debt tend to be more expensive than for issuing equity.
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Q:
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A. Spread
B. Direct underwriting cost
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Q:
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C. Wednesday, December 2
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A. Record date
B. Declaration date
C. Ex-dividend date
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Q:
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C. two business
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E. one