Your firm needs to raise $10 million. Assuming that flotation costs are expected

Question

Your firm needs to raise $10 million. Assuming that flotation costs are expected to be $15 per share, and that the market price of the stock is $120, how many shares would have to be issued? What is the dollar size of the issue?
Clearly label the calculation of the required ratios and solve using Excel. Use formulas to calculate the ratios and format the cells to insert a comma if there is more than three numbers. Round to the nearest whole number. In each part summarize your analysis in a concise management statement not to exceed 100 words each.

Explanation / Answer

If flotation costs to the firm are $15, its net per share will be 120-15= 105. So 10,000,000/105= 95,238.09 or 95,239 shares. Issue would be 95,239 *120= $11,428,680

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