Question

Gravity, Inc., needs to raise $49.5 million to fund its expansion plans. The company will sell shares at a price of $28.30 in a general cash offer and the company's underwriters will charge a spread of 6 percent. How many shares need to be sold

Answer 1

$1,860,762.35

Step-by-step explanation:

The computation of the number of shares need to be sold is shown below:

= Raise amount ÷ received per share

where,

Amount received by company per share = Price per share in case of general cash offer - Underwriter's commission per share

= $28.30 - $28.30 × 6%

= $28.30 - $1.698

= $26.602

So, the number of shares sold is

= $49,500,000 ÷ $26.602

= $1,860,762.35