CFIN6
Spreadsheet Problem Solution
Chapter 3
a. Following are the input data and the results for the initial scenario:
INPUT DATA:
KEY OUTPUT:
Amount needed by the firm:
$500,000
Issue amount ($):
$540,000
Flotation costs (in decimal form):
6.50%
# of shares:
13,500
Underwriting fees
Total issuing costs
Amt of usable funds
$500,000
b. Following are the input data and the results for scenario where Diction needs $500,000, flotation costs are
10%, and other expenses are $4,900:
INPUT DATA:
KEY OUTPUT:
Amount needed by the firm:
$500,000
Issue amount ($):
$561,000
Flotation costs (in decimal form):
10.00%
Underwriting fees
Other expenses
$4,900
Total issuing costs
# of shares:
14,025
Amt of usable funds
$500,000
c. Following are the input data and the results for scenario where Diction needs $500,000, flotation costs are
8.2%, and other expenses are $4,900:
INPUT DATA:
KEY OUTPUT:
Amount needed by the firm:
$500,000
Issue amount ($):
$550,000
Flotation costs (in decimal form):
8.20%
# of shares:
13,750
Underwriting fees
Other expenses
$4,900
Total issuing costs
Amt of usable funds
$500,000
CFIN6
d. Following are the input data and the results for scenario where Diction needs $500,000, flotation costs are
6.5%, and other expenses are $5,835:
INPUT DATA:
KEY OUTPUT:
Amount needed by the firm:
$500,000
Flotation costs (in decimal form):
6.50%
# of shares:
13,525
Other issuing expenses:
$5,835
$40.00
Underwriting fees
Other expenses
$5,835
Total issuing costs
Amt of usable funds
$500,000
Issue amount ($):
$541,000
e. Following are the input data and the results for scenario where Diction needs $450,000, flotation costs are
7%, and other expenses are $3,840:
INPUT DATA:
KEY OUTPUT:
Amount needed by the firm:
$450,000
Issue amount ($):
$488,000
Flotation costs (in decimal form):
7.00%
# of shares:
12,200
Other issuing expenses:
$3,840
$40.00
Underwriting fees
Other expenses
$3,840
Total issuing costs
Amt of usable funds
$450,000
f. Following are the input data and the results for scenario where Diction needs $450,000, flotation costs are
7%, other expenses are $3,840, and the stock price is $32 per share:
INPUT DATA:
KEY OUTPUT:
Amount needed by the firm:
$450,000
Issue amount ($):
$488,000
Flotation costs (in decimal form):
7.00%
# of shares:
15,250
Other issuing expenses:
$3,840
$32.00
Underwriting fees
Other expenses
$3,840
Total issuing costs
Amt of usable funds
$450,000