Solved: New equity to be issued is expected on the announcement date, Finance Basics

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New equity to be issued is expected on the announcement date

Problem:

The problem is referring to the signaling study, which states a 30 percent loss of the new equity to be issued is expected on the announcement date.

A company has 200 million shares outstanding trading at $6 a share. The company announces its intention to raise $100 million by selling new shares.

At what price should the company expect its existing shares to sell immediately after the announcement?

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Finance Basics: New equity to be issued is expected on the announcement date

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