A company wants to raise $10 million in equity at an expected offering price of

Question

A company wants to raise $10 million in equity at an expected offering price of $20 per share.  Its investment banker will receive $1.50 for each share sold and incur expenses of $1 million.   How many shares must be sold for the company to receive $10 million. Round to the nearest whole number.
a. $450,000
b. $540,541
c. $594,595
d. $500,000
e. None of the above A company wants to raise $10 million in equity at an expected offering price of $20 per share.  Its investment banker will receive $1.50 for each share sold and incur expenses of $1 million.   How many shares must be sold for the company to receive $10 million. Round to the nearest whole number.
a. $450,000
b. $540,541
c. $594,595
d. $500,000
e. None of the above A company wants to raise $10 million in equity at an expected offering price of $20 per share.  Its investment banker will receive $1.50 for each share sold and incur expenses of $1 million.   How many shares must be sold for the company to receive $10 million. Round to the nearest whole number.
a. $450,000
b. $540,541
c. $594,595
d. $500,000
e. None of the above

Explanation / Answer

Share price = $20

Commission = $1.5

Cash in Hand = 20-1.5 = 18.5

Required = $10million

Expense = $1 Million

Total = $(10+1) million

No. os shares = 11,000,000/18.5 = 594595

Therefore answer is c) 594595

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