The Company, whose stock price is now $56, needs to raise $25 million in common stock. Underwriters have informed the fi
Posted: Sun Jul 03, 2022 12:56 pm
The Company, whose stock price is now $56, needs to raise $25 million in common stock. Underwriters have informed the firm's management that they must price the new issue to the public at $50 per share because of signaling effects. The underwriters' compensation will be 6% of the issue price, so the company will net $47 per share. The firm will also incur expenses in the amount of $200,000.
How many shares must the firm sell to net $25 million after underwriting and flotation expenses? Do not round intermediate calculations. Round your answer to the nearest whole number.
a.
500,000
536,170
450,000
504,000
How many shares must the firm sell to net $25 million after underwriting and flotation expenses? Do not round intermediate calculations. Round your answer to the nearest whole number.
a.
500,000
536,170
450,000
504,000