Question

In: Finance

Suppose your company is planning go on public to raise capital for business project. The underwriting...

Suppose your company is planning go on public to raise capital for business project. The underwriting discount is $1.50 and there is a legal fee of $250,000. If the offering price of the share is set at $21.50 per share, how many shares does the company have to issue to raise $80 million?

Select one:

a. 4 012 500

b. 6 696 429

c. 6 591 337

d. 5 789 452

Expert Solution

Step 1: Find Net proceeds from the issue of a share:

Net proceeds from the issue of a share = Offering price - Discount

= $21.50 - $1.50

=$20.00

Step 2: Find the total amount to raise:

Total amount to raise = Required capital + legal fees

= $80,000,000 + $250,000

= $80,250,000

Step 3: Find the number of shares to issue to get the total amount:

Therefore, the correct answer is the option "a. 4,012,500 "

jeff jeffy answered 2 years ago

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