Question

if a company wants to sell 100 shares to raise $1,000 with earnings per share of $2, what would the share price need to be? (hint: one is best answer and two are incorrect)

Answer 1

To raise $1,000 by selling 100 shares, the share price would need to be set at $10 per share, which is calculated by dividing the total amount to raise by the number of shares.

Step-by-step explanation:

If a company wants to sell 100 shares to raise $1,000, and the earnings per share is $2, the price per share needs to be simply the total amount they wish to raise divided by the number of shares they are selling. In this case, the company wants to raise $1,000 from selling 100 shares, so we would calculate the share price like this:

Share Price = Total Amount to Raise / Number of Shares

Share Price = $1,000 / 100

Share Price = $10 per share

Therefore, the company would need to set the share price at $10 to meet their goal of raising $1,000.