1) After the banner year of increasing profits and positive stock returns, managers of Raptor Pharmaceuticals Corporation (RPC) have determined to launch seasoned equity offering to increase new equity capital. RPC presently has= 10 million shares outstanding, and yesterday's closing market price was= $75.00 per RPC share.
Company plans to sell 1 million recently issued shares in its seasoned offering. Investment banking firm Robbum and Blindum (R&B) has decided to under-prepare new stock issue for 2.5% discount from offering price, which RPC and R&B have settled must be= $0.75 per share lower than RPC's closing price the day before offering is sold.
a) What is probable to occur to RPC's stock price when plan for this seasoned offering is in public announced.
b) Suppose that RPC's stock price closes at= $72.75 per share day before seasoned offering is launched, find net proceeds will RPC receive from this offering?
c) Compute return earned by RPC's existing stockholders on their shares from the time before seasoned offering was announced till it was really sell for $72.75 per share.
d) Compute total cost of seasoned equity offering to RPC's existing stock-holders as the percentage of = offering proceeds.