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ds/FINC423 HW9 01.pdf 2. You work in the Finance Department for Flynn, Inc. Your firm needs to raise $7,250,000,000 ($7.25B) to finance new capital investments. Your boss is considering raising this capital using a rights offering. He has asked you to analyze the effect of such an offering on the firm's shareholders The firm has 1,100,000,000 shares outstanding. These are currently selling on the exchange for $24.52 Caleulate the current market value of fim equity To haise the needed $7,25000,00 in new capital, your bos is considering issing new shares at a subscription price of $20 in the righits offering How many new shares will the firm need to issue to raise the $7,250,000,000 Cakculate the number of rights that will be needed to purchase a new share During the subscription period, what will be the market value of a right? After the rights offering, what will be the firm valuc? The number of outstanding shares? The share price 3. You are employed in the Finance Division of a firm that has 567,562,000 shares outstanding. The current share price is S27.86. The forecast earnings are $1,788,570,000 Calculate the current market value of firm equity and the earmings per Share (EPS). The firm has accumulated a stockpile of $2,500,000,000 in excess cash, and the directors want to pay-out theve funds to the shareholders. You have been asked to compare the effects of a special one-time dividend and a share repurchase. If the funds are paid out as a one-time special dividend, what will be the dividend per share (DPSy? What is the firm value afer the dividend? What is the share price afler the dividend? What is the EPS afher the dividend If the tins executes a share repurchase, how many shares can it purchase at what price? How esany shares will remain? What is the firm value after the repurchase? What is the share price after the reparchase? What is the EPS after the repurchase? ch HEWLETT-PACKA 3 4 5 6 7 8

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