Problem:
Faro technologies, whose products include portable 3D measurement equipment, has 400 million shares outstanding trading at $5 a share. The company announces its intention to raise $200 million by selling new shares.
Requirement:
Question 1: What do market signaling studies suggest will happen to Faro's stock price on the announcement date? why?
Question 2: How large a gain or loss in aggregate dollar terms do market signaling studies suggest existing FARo sharholders will experience on the announcement date?
Question 3: What percentage of the amount of money FARO intends to raise is this expected gain or loss?
Question 4: What percentage of the value of FARO's existing equity prior to the announcement is this expected gain or loss?
Question 5: At what price should FARO expect its existing shares to sell for immediately after the announcement?
Note: Please describe comprehensively and provide step by step solution.