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Chapter 5: 3BP-b (page 567)

Katie Homes and Garden Co. has 10,640,000 shares outstanding. The stock is currently selling at $52 per share. If an unfriendly outside group acquired 25 percent of the shares, existing stockholders will be able to buy new shares at 30 percent below the currently existing stock price.

b. What will be the new purchase price for the existing stockholders?

Short Answer

Expert verified

The new share price for existing shareholders will be $36.40.

Step by step solution

01

Information provided in the question

Share outstanding = 10,640,000

Selling price of shares = $52

New shares are provided to existing shares at 30% less price

02

Calculation of new price for existing shareholders

The new price for existing shareholders will be $36.40.

New Price = Current price-Reduction in price

= $52-($52×30%)

= $52- $15.60

=$36.40

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Most popular questions from this chapter

Trump Card Co. will issue stock at a retail (public) price of \(32. The company will receive \)29.20 per share.

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