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Q. Tuttle buildings Inc decided public selling 5000 common stock. Investment bankers agreed a smaller fee new (6% gross proceeds versus normal 10%) exchange a 1 year option purchase additional 200000 shares in year, when the stock price is forecasted to be 6.50 per share. Explain however, there is a chance which the stock price will actually be 12.00 per share one year from now. If the $12 price occurs, illustrate what would the present value of the entire underwriting compensation be? Suppose which the investment bankers required return on such arrangements is 15% also ignore taxes.

Business Management, Management Studies

  • Category:- Business Management
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