The Scandrick Corporation needs to raise $65 million to finance its expansion into new markets. The...

The Scandrick Corporation needs to raise $65 million to finance its expansion into new markets. The company will sell new shares of equity via a general cash offering to raise the needed funds. If the the offer price is $35 per share and the company’s underwriters charge a spread of 7 percent, how many shares need to be sold?

Expert Solution

Cash Needed 65000000$

Underwriter Spread 7%

Underwriter Charges (65 Million/93%*7%) 4892473.12$

Total Proceeds required(65000000+489247.12) 69892473.12$

Price Per Share 35$

Total Shares Required to be sold (69892473.12/35) 1996927.80

Therefore, company is required to issue 1,996,928 shares @ 35$ to raise the required 65 million $ in hand

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jeff jeffy answered 2 years ago

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