Junior's Burgers needs to raise $250 million to expand their burger business. Junior's must pay its investment...

Junior's Burgers needs to raise $250 million to expand their burger business. Junior's must pay its investment banker 5% of the issue's total value. If Junior's can issue stock at the market price of $80 per share, how many shares must be issued so that Junior's has $250 million after flotation costs to fund the planned growth?

Expert Solution

Post floatation cost share price = Market price * (1 - Floatation cost)

Post floatation cost share price = $80 * (1 - 5%) = $76

Number of shares = Amount raised/Post floatation cost share price

Number of shares = $250,000,000/$76 = 3,289,474

jeff jeffy answered 2 years ago

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