Gravity, Inc., needs to raise $46.5 million to fund its expansion plans. The company will sell...

Gravity, Inc., needs to raise $46.5 million to fund its expansion plans. The company will sell shares at a price of $27.70 in a general cash offer and the company's underwriters will charge a spread of 7 percent. How many shares need to be sold?

Expert Solution

The number of capital needed to be raised

= 46.5 Millions

Since price is fixed at = $ 27.70 per share

The number of shares before adjustments for underwriters spread=

= (46.5/27.7)= 1.67870036 Millions

Number of shares adjusted for underwriters spread=( 1.67870036/1- spread)

=(1.67870036/1-.07)

= (1.67870036/.93)

= 1.80505415 Million shares

=18,05,054 shares.

So the company needs to issue 18,05,054 shares

jeff jeffy answered 2 years ago

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