The Educated Horses Corporation needs to raise $40 million to finance its epansi

Question

The Educated Horses Corporation needs to raise $40 million to finance its epansion into new markets. The company will sell new shares of equity via a general cash offering to raise the needed funds. The offer price is $30 per share and the company's underwriters charge an 8 percent spread. If the SEC filing fee and associated administrative expenses of the offering are $1,080,000, how many shares need to be sold? (Do not round your intermediate calculations.) O 1488.406 O 1,449,275 O 1,267,901 O 1,547942 O 1,369,333

Explanation / Answer

Finance required $40 million Offer Price $30 Underwriters charges 8% spread SEC filing fee and associated administrative expenses of the offering $1080000 Underwriter's charges 30*0.08 2.4 Let the no of shares to be raised be x 30x = 40000000 + 2.4x + 1080000 41080000 30x = 41080000 + 2.4x 30x-2.4x = 41080000 27.6x = 41080000 37.6 x = 41080000/27.6 1488406 x = 1488406 The no of shares to be issued will be 1488406

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