The St. Anger Corporation needs to raise $82 million to finance its expansion in

Question

The St. Anger Corporation needs to raise $82 million to finance its expansion into new markets. The company will sell new shares of equity via a general cash offering to raise the needed funds. If the offer price is $60 per share and the company’s underwriters charge a spread of 6 percent, how many shares need to be sold? (Do not round intermediate calculations and round your final answer to the nearest whole number. Enter your answer as a whole number (e.g., 1,234,567).)

The St. Anger Corporation needs to raise $82 million to finance its expansion into new markets. The company will sell new shares of equity via a general cash offering to raise the needed funds. If the offer price is $60 per share and the company’s underwriters charge a spread of 6 percent, how many shares need to be sold? (Do not round intermediate calculations and round your final answer to the nearest whole number. Enter your answer as a whole number (e.g., 1,234,567).)

Explanation / Answer

We have, Total Proceeds(1-.06) = $ 82000000

Therefore total proceeds = 82000000/(1-.06)

= $ 87234042.5532

Therefore, shares offered = 87234042.5532/60

=1453900.70922 or, 1453900 shares (rounded off)

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