FARO Technologies, whose products include portable 3D measurement equipment, recently had 26 million shares outstanding trading at $45 a share. Suppose the company announces its intention to raise $290 million by selling new shares. How large a loss in dollar terms will existing FARO shareholders experience on the announcement date, based on studies that show losses are 30% of the size of the new issue?
FARO Technologies, whose products include portable 3D measurement equipment, recently had 26 million shares outstanding trading at $45 a share. Suppose the company announces its intention to raise $290 million by selling new shares. How large a loss in dollar terms will existing FARO shareholders experience on the announcement date, based on studies that show losses are 30% of the size of the new issue?
Trigonometry (MindTap Course List)
10th Edition
ISBN:9781337278461
Author:Ron Larson
Publisher:Ron Larson
ChapterP: Prerequisites
SectionP.3: The Cartesian Plane And Graphs Of Equations
Problem 7ECP
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FARO Technologies, whose products include portable 3D measurement equipment, recently had 26 million shares outstanding trading at $45 a share. Suppose the company announces its intention to raise $290 million by selling new shares.
- How large a loss in dollar terms will existing FARO shareholders experience on the announcement date, based on studies that show losses are 30% of the size of the new issue?
Note: Enter your answer in millions without a sign.
- What percentage of the value of FARO’s existing equity prior to the announcement is this expected loss?
Note: Round your answer to 1 decimal place.
- At what price should FARO expect its existing shares to sell immediately after the announcement?
Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
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