Don’s Captain Morgan, Inc., needs to raise $13.50 million to finance plant expan

Question

Don’s Captain Morgan, Inc., needs to raise $13.50 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 $21.40 per share and Don’s will receive $19.35 per share. Calculate the underwriter’s spread per share on the issue. (Round your answer to 2 decimal places.) Underwriter’s spread $ per share How many shares of stock will Don’s need to sell in order to receive the $13.50 million it needs? Number of shares sold shares

Explanation / Answer

Underwriters spread per share = $21.40-$19.35 = $2.05

Shares need to sell = $13,500,000/$19.35 = 697,675 shares

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

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