Global Geotell just hired InvestPro, a local investment banker, to help it issue

Question

Global Geotell just hired InvestPro, a local investment banker, to help it issue common stock. The proceeds of the stock offering will be used for research and development of a new satellite tracking system for the US Navy. The market value of the issue equals $150 million, direct costs incurred by Global Geotell will amount to $225,000 and InVestPro charges a 7 percent fee for it's services.

a. What will the net proceeds to Global Geotell from the $150 million equity issue? That is, how much of the issue will Global Geotell be able to use?

b. If the price per share of the common stock equals $25 at the time of issue, how many shares of stock must be issued if the total value of the issue is $150 million?

c. How many shares of stock must be issued if Global Geotell actually needs $150 million for its research and development? Assume that the price is $25 per share.

Explanation / Answer

a) Net proceeds in Millions $     139.50 150*(1-7%) b) Number of stocks must be issued    6,000,000 150000000/25 c) Number of stocks that must be issued for $150 Million    6,451,613 150000000/(25*(1-7%))

Related Questions

Navigate

• Browse (All)
• Browse G
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.