1. Calculating Costs of Issuing Stock Turbo Technology Corp. recently went public with an initial public offering of 3.15 million shares of stock. The underwriter used a firm commitment offering in which the net proceeds was $8.25 per share and the underwriter's spread was 9 percent of the gross proceeds. Turbo also paid legal and other administrative costs of $350,000 for the IPO. Calculate the gross proceeds per share received by Turbo from the sale of the 3.15 million shares of stock.
2. Under/Over Valued Stock A manager believes his firm will earn a 12.40 percent return next year. His firm has a beta of 1.46, the expected return on the market is 9.6 percent, and the risk-free rate is 4.6 percent. Compute the return the firm should earn given its level of risk and determine whether the manager is saying the firm is under-valued or over-valued.
3. Portfolio Beta You own $1,600 of City Steel stock that has a beta of 1.63. You also own $6,300 of Rent-N-Co (beta = 1.93) and $5,300 of Lincoln Corporation (beta = 1.03). What is the beta of your portfolio (closest to)?
4. Portfolio Weights If you own 280 shares of Air Line Inc at $19.05, 180 shares of BuyRite at $10.0, and 380 shares of Motor City at $46.05, what are the portfolio weights of each stock?
5. Value a Constant Growth Stock Financial analysts forecast Wal-Mart Stores (WMT) growth for the future to be 11.00 percent. Their recent dividend was $1.43. What is the value of their stock when the required rate of return is 15.00 percent?