FINC5001_apital Markets Corporate Finance_2009 Semester 1_Week 13 FINC 5001 Tutorial Solutions.docVIP

FINC 5001 Capital Markets and Corporate Finance Tutorial Questions and Solutions Week 13 – Capital Structure Policy DQ 1 A company wants to raise $100 million by issuing shares over the next 12 months. Discuss the different methods available to the company for raising equity finance. Be sure to identify the possible risks and costs. Answer There are four avenues by which the company can raise $100 million in equity finance: (1) Initial Public Offering (IPO) (2) Rights Issue (3) Dividend Reinvestment Plan (DRP) (4) Private Placement. An IPO involves listing the company on a recognised stock e