a. Calculate the total proceeds for Yext's IPO. b. Calculate the percentage underwriter discount. c. Calculate the dollar amount of the underwriting fee for d. Calculate the net proceeds for Yext's IPO. e. Calculate Yext's IPO underpricing. f. Calculate Yext's market capitalization.
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Cost of Capital
Shareholders and investors who invest into the capital of the firm desire to have a suitable return on their investment funding. The cost of capital reflects what shareholders expect. It is a discount rate for converting expected cash flow into present cash flow.
Capital Structure
Capital structure is the combination of debt and equity employed by an organization in order to take care of its operations. It is an important concept in corporate finance and is expressed in the form of a debt-equity ratio.
Weighted Average Cost of Capital
The Weighted Average Cost of Capital is a tool used for calculating the cost of capital for a firm wherein proportional weightage is assigned to each category of capital. It can also be defined as the average amount that a firm needs to pay its stakeholders and for its security to finance the assets. The most commonly used sources of capital include common stocks, bonds, long-term debts, etc. The increase in weighted average cost of capital is an indicator of a decrease in the valuation of a firm and an increase in its risk.
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- Selected transactions completed by Equinox Products Inc. during the fiscal year ended December 31, 2016, were as follows: a. Issued 15,000 shares of 20 par common stock at 30, receiving cash. b. Issued 4,000 shares of 80 par preferred 5% stock at 100, receiving cash. c. Issued 500,000 of 10-year, 5% bonds at 104, with interest payable semiannually. d. Declared a quarterly dividend of 0.50 per share on common stock and 1.00 per share on preferred stock. On the date of record, 100,000 shares of common stock were outstanding, no treasury shares were held, and 20,000 shares of preferred stock were outstanding. e. Paid the cash dividends declared in (d). f. Purchased 7,500 shares of Solstice Corp. at 40 per share, plus a 150 brokerage commission. The investment is classified as an available-for-sale investment. g. Purchased 8,000 shares of treasury common stock at 33 per share. h. Purchased 40,000 shares of Pinkberry Co. stock directly from the founders for 24 per share. Pinkberry has 125,000 shares issued and outstanding. Equinox Products Inc. treated the investment as an equity method investment. i. Declared a 1.00 quarterly cash dividend per share on preferred stock. On the date of record, 20,000 shares of preferred stock had been issued. j. Paid the cash dividends to the preferred stockholders. k. Received 27,500 dividend from Pinkberry Co. investment in (h). l. Purchased 90,000 of Dream Inc. 10-year, 5% bonds, directly from the issuing company, at their face amount plus accrued interest of 375. The bonds are classified as a heldtomaturity long-term investment. m. Sold, at 38 per share, 2,600 shares of treasury common stock purchased in (g). n. Received a dividend of 0.60 per share from the Solstice Corp. investment in (f). o. Sold 1,000 shares of Solstice Corp. at 45, including commission. p. Recorded the payment of semiannual interest on the bonds issued in (c) and the amortization of the premium for six months. The amortization is determined using the straight-line method. q. Accrued interest for three months on the Dream Inc. bonds purchased in (l). r. Pinkberry Co. recorded total earnings of 240,000. Equinox Products recorded equity earnings for its share of Pinkberry Co. net income. s. The fair value for Solstice Corp. stock was 39.02 per share on December 31, 2016. The investment is adjusted to fair value, using a valuation allowance account. Assume Valuation Allowance for Available-for-Sale Investments had a beginning balance of zero. Instructions 1. Journalize the selected transactions. 2. After all of the transactions for the year ended December 31, 2016, had been posted [including the transactions recorded in part (1) and all adjusting entries], the data that follows were taken from the records of Equinox Products Inc. a. Prepare a multiple-step income statement for the year ended December 31, 2016, concluding with earnings per share. In computing earnings per share, assume that the average number of common shares outstanding was 100,000 and preferred dividends were 100,000. (Round earnings per share to the nearest cent.) b. Prepare a retained earnings statement for the year ended December 31, 2016. c. Prepare a balance sheet in report form as of December 31, 2016.Calculating the Number of Shares Issued Castalia Inc. issued shares of its $0.80 par value common stock on September 4, 2019, for $8 per share. The Additional Paid-In Capital-Common Stock account was credited for 5612,000 in the journal entry to record this transaction. Required: How many shares were issued on September 4, 2019?On April 13, 2017, Yext Inc. completed its IPO on the NYSE. Yext sold 10,500,000 shares of stock at an offer price of $11 with an underwriting discount of $0.77 per share. Yext’s closing stock price on the first day of trading on the secondary market was $13.41, and 85,489,470 shares were outstanding. a. Calculate the total proceeds for Yext’s IPO. b. Calculate the percentage underwriter discount. c. Calculate the dollar amount of the underwriting fee for Yext’s IPO. d. Calculate the net proceeds for Yext’s IPO. e. Calculate Yext’s IPO underpricing. f. Calculate Yext’s market capitalization
- On September 28, 2017, Roku Inc. (NASDAQ: ROKU) concluded its initial public offering (IPO) of 15,900,000 shares of its Class A common stock and realized net proceeds of approximately $219,420,000. The par value per Class A common stock share is $0.0001. Assume that the market price on the issue date was $13.80 per share. Ignore underwriting and other expenses resulting from the IPO. Questions What is the impact on Roku's balance sheet from its IPO? Does this IPO have any direct impact on Roku's net income? On what section of Roku's statement of cash flows will the cash proceeds from the IPO appear? Will it be an increase or decrease in that section?Initial Public Offering Longview Manufacturing, Inc (LMI) completed an IPO on the NYSE on October 1, 2020. LMI sold 18,000,000 shares of stock at an offering price of $24 with an underwriting discount of $1.40 per share. LMI's closing stock price in the secondary market at the end of the first day of trading was $26.50, and 18,000,000 shares were outstanding. a. Calculate the total proceeds for LMI's IPO. b. Calculate the percentage underwriter discount c. Calculate the dollar amount of the underwriting fee for LMI's IPO d. Calculate the net proceeds for LMI's IPO e. Calculate LMI's IPO underpricing f. Calculate LMI's market capitalization as of the end of the first day of public tradingOn December 31, 2017, Beta Company had 270,000 shares of common stock issued and outstanding. Beta issued a 5% stock dividend on June 30, 2018. On September 30, 2018, 34,000 shares of common stock were reacquired as treasury stock. What is the appropriate number of shares to be used in the basic earnings per share computation for 2018? Multiple Choice 275,000. 292,000. 283,500. 319,200.
- On April 18, 2019, the video conferencing company, Zoom, completed its IPO on the Nasdaq. Zoom sold 9,911,434 shares of Class A stock with one vote per share at an offer price of $36 and an underwriter discount of $1.80 per share. Zoom’s closing stock price on the first day of trading on the sec-ondary market was $62, and 24,070,086 Class A shares were outstanding. There were also 232,318,285 shares of Class B common stock with 10 votes each out-standing and held privately by Zoom insiders. a. Calculate the total proceeds for Zoom’s IPO. b. Calculate the percentage underwriter discount. c. Calculate the dollar amount of the underwriting fee for Zoom’s IPO. d. Calculate the net proceeds for Zoom’s IPO. e. Calculate Zoom’s IPO underpricing. f. Calculate Zoom’s market capitalization assuming that market value per share is the same for both classes of stock. g. What percentage of Zoom’s total common stock (Class A plus Class B) do Class A stockholders own after the IPO? What…The equity section of Atticus Group’s 2017 year-end balance sheet had 200,000 shares of $4 par value common stock authorized. Of this amount, 40,000 shares were issued and outstanding in one offering in which the stock was sold at $7 per share. Retained earnings had a balance of $320,000. The following transactions and events occurred in 2018. Jan. 5 Declared a $0.50 per share cash dividend, date of record January 10, to be paid February 10. Mar. 20 Purchased 3,000 shares of treasury stock for $10 per share. Apr. 5 Declared a 20% stock dividend when the stock’s market value was $12 per share. The dividend is to be distributed on April 30 to stockholders of record on April 10. Jul. 5 Declared a $0.25 per share cash dividend, date of record July 10, to be paid August 10. Aug. 14 Issued 4,000 shares at $15 per share. Oct. 5 Declared and distributed a 2-for-1 stock split. Dec. 31 Atticus recorded net income of $248,000 in 2018. Construct the equity section of…At December 31, 2015, the balance sheet of Meca International included the following shareholders’ equity accounts: Shareholders’ Equity ($ in millions) Common stock, 60 million shares at $1 par $ 60 Paid-in capital—excess of par 300 Retained earnings 410 Required: Assuming that Meca International views its share buybacks as treasury stock, record the appropriate journal entry for each of the following transactions: 1. On February 12, 2016, Meca reacquired 1 million common shares at $13 per share. 2. On June 9, 2017, Meca reacquired 2 million common shares at $10 per share. 3. On May 25, 2018, Meca sold 2 million treasury shares at $15 per share—determine cost as the weightedaverage cost of treasury shares. 4. For the previous transaction, assume Meca determines the cost of treasury shares by the FIFO method.
- The equity section of Atticus Group’s 2017 year-end balance sheet had 200,000 shares of $4 par value common stock authorized. Of this amount, 40,000 shares were issued and outstanding in one offering in which the stock was sold at $7 per share. Retained earnings had a balance of $320,000. The following transactions and events occurred in 2018. Jan. 5 Declared a $0.50 per share cash dividend, date of record January 10, to be paid February 10. Mar. 20 Purchased 3,000 shares of treasury stock for $10 per share. Apr. 5 Declared a 20% stock dividend when the stock’s market value was $12 per share. The dividend is to be distributed on April 30 to stockholders of record on April 10. Jul. 5 Declared a $0.25 per share cash dividend, date of record July 10, to be paid August 10. Aug. 14 Issued 4,000 shares at $15 per share. Oct. 5 Declared and distributed a 2-for-1 stock split. Dec. 31 Atticus recorded net income of $248,000 in 2018. 1.What is total paid-in capital one…The equity section of Atticus Group’s 2017 year-end balance sheet had 200,000 shares of $4 par value common stock authorized. Of this amount, 40,000 shares were issued and outstanding in one offering in which the stock was sold at $7 per share. Retained earnings had a balance of $320,000. The following transactions and events occurred in 2018. Jan. 5 Declared a $0.50 per share cash dividend, date of record January 10, to be paid February 10. Mar. 20 Purchased 3,000 shares of treasury stock for $10 per share. Apr. 5 Declared a 20% stock dividend when the stock’s market value was $12 per share. The dividend is to be distributed on April 30 to stockholders of record on April 10. Jul. 5 Declared a $0.25 per share cash dividend, date of record July 10, to be paid August 10. Aug. 14 Issued 4,000 shares at $15 per share. Oct. 5 Declared and distributed a 2-for-1 stock split. Dec. 31 Atticus recorded net income of $248,000 in 2018. Determine the following amounts after…The equity section of Atticus Group’s 2017 year-end balance sheet had 200,000 shares of $4 par value common stock authorized. Of this amount, 40,000 shares were issued and outstanding in one offering in which the stock was sold at $7 per share. Retained earnings had a balance of $320,000. The following transactions and events occurred in 2018. Jan. 5 Declared a $0.50 per share cash dividend, date of record January 10, to be paid February 10. Mar. 20 Purchased 3,000 shares of treasury stock for $10 per share. Apr. 5 Declared a 20% stock dividend when the stock’s market value was $12 per share. The dividend is to be distributed on April 30 to stockholders of record on April 10. Jul. 5 Declared a $0.25 per share cash dividend, date of record July 10, to be paid August 10. Aug. 14 Issued 4,000 shares at $15 per share. Oct. 5 Declared and distributed a 2-for-1 stock split. Dec. 31 Atticus recorded net income of $248,000 in 2018. Construct the equity section of Atticus…