A company is planning a new plant and needs to raise (net of underwriting cost) $18.6 million to finance it. The company...
A company is planning a new plant and needs to raise (net of underwriting cost) $18.6 million to finance it. The company plans to raise the money through a general cash offering priced at an offer price of $4 a share. The underwriters charge a 7 per cent spread. How many shares does the company have to sell to achieve its goal (in millions to three decimal places)? (Hint: required amount/(1-spread) = issue amount)
Select one:
a. 5.000
b. 21.505
c. 3.738
d. 3.720
Homework Answers
Number of shares to be sold=required amount/(1-spread%)*1/offer
price per share
=18.6/(1-7%)*1/4
=5.00000 million
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