The current market value of Calenda Corporation's equity is $120 million. The company has 10 million outstanding shares and will issue 5 million new shares. The investment banker charges a 7% spread. Show all answers in Excel.
a. What is the correctly valued offer price?
b. How much cash will the company raise net of the spread?
c. What percentage of the company will new stockholders own?
d. What are 3 reasons that explain why a firm wants to raise new equity capital?
e. What are 3 reasons that explain why a firm would want to raise new capital through debt rather than equity?