Question

The Whistling Straits Corporation needs to raise $40 million to finance its expansion intonew markets. The company will sell new shares of equity via a general cash offering toraise the needed funds. If the offer price is $35 per share and the company'sunderwriters charge a 11 percent spread, how many shares need to be sold?

Answer 1

Step-by-step explanation:

Total Finance Needed = $40,000,000

Offer price per share = $35 per share

Charges of underwriter = 11%

Total Number of shares needed to be sold = ( $40,000,000 / $35 ) x 111%

Total Number of shares needed to be sold = 1,142,857 x 111%

Total Number of shares needed to be sold = 1,267,571 shares

The Whistling Straits Corporation needs 1,267,571 shares to raise $40 million