Highlander Homes Stock Trades at $32 Per Share and There

question 73

Multiple Choice

Highlander Homes stock trades at $32 per share and there are 50 million shares outstanding.The management would like to raise $200 million in an SEO.If the underwriter charges 5% of gross proceeds,and all the shares are primary shares sold to new investors,what percentage of the company will be owned by the new investors?

• A)10.51%
• B)10.79%
• C)11.11%
• D)11.63%

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Definitions:

Allocation-Base Usage

The process of distributing costs based on a predetermined criterion or base, such as machine hours or labor costs.

Activity-Based Costing

Activity-based costing is a method in accounting that assigns costs to products and services based on the resources they consume and the activities undertaken to produce them.

Period Costs

Expenses that are incurred by a business during a specific time period but are not directly tied to the production of goods and are reported immediately in the company's income statement.

Factory Overhead Allocation

The process of distributing indirect manufacturing costs, such as utilities and rent, across various products based on a predetermined rate or method.