Harper’s Dog Pens, Inc., with the help of its investment bank, recently issued $

Question

Harper’s Dog Pens, Inc., with the help of its investment bank, recently issued $194.3 million of new debt. The offer price on the debt was $1,000 per bond and the underwriter’s spread was 5 percent of the gross proceeds. Calculate the amount of capital funding Harper’s Dog Pens raised through this bond issue

Don’s Captain Morgan, Inc., needs to raise $13.90 million to finance plant expansion. In discussions with its investment bank, Don’s learns that the bankers recommend an offer price (or gross proceeds) of $21.80 per share and Don’s will receive $19.25 per share.

Calculate the underwriter’s spread per share on the issue

How many shares of stock will Don’s need to sell in order to receive the $13.90 million it needs?

Don’s Captain Morgan, Inc., needs to raise $13.90 million to finance plant expansion. In discussions with its investment bank, Don’s learns that the bankers recommend an offer price (or gross proceeds) of $21.80 per share and Don’s will receive $19.25 per share.

Explanation / Answer

Harper's Dog Pens Details Amt $ Gross Proceeds of Debt        194,300,000 Underwriter's spread@5% of Gross Proceeds =             9,715,000 Capital funding received by Harper's Dog Pens $    184,585,000 Don's Captain Morgan Inc. Details Amt $ Gross Proceeds per share                     21.80 Net Receipt by Don's per share                     19.25 Underwriter's spread/share                        2.55 Fund required for expansion           13,900,000 Net Receipt by Don's per share                     19.25 No of shares to be issued by Don's to accumulated the fund                 722,078 So Don's need to sale 722,078 shares for the required expansion fund

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