The Direct Interactive Publishing Company Is Planning to Raise $200

question 72

Essay

The Direct Interactive Publishing Company is planning to raise $200 million dollars in new capital. There are currently 50 million shares outstanding with an estimated market price of $60 each. The corporate officers are debating whether to use a rights offering (with or without a standby underwriting) or have the issue fully underwritten. The company is currently listed on a regional exchange and plans to list on a national exchange after the security issue. List and explain three advantages/disadvantages of each method.

---

Definitions:

Monetary Policy

The management of the money supply and interest rates by the central bank to influence economic growth and stability.

Public Choice Economists

Economists who apply economic principles and methodologies to study and analyze political behavior and public policies.

Optimal Allocation

The most efficient distribution of resources among different possible uses that maximizes desired outcomes, such as profit or social welfare, without wasting any resources.

Deferred Costs

Expenses that are incurred but not immediately charged against income, typically spread over several accounting periods.