Jasmine Flowers must raise $345 million for its future expansion. To do so, Jasm

Question

Jasmine Flowers must raise $345 million for its future expansion. To do so, Jasmine expects to issue new common stock. investment bankers have informed the company that flotation costs will be 6.5% of the total amount issued and that the company will incur another $576,000 in costs associated with the issue. Jasmine can issue its stock for $55 per share. Determine how many shares Jasmine must sell to net $345 million after flotation costs. Please and thank you! I always rate 5 stars!!! Jasmine Flowers must raise $345 million for its future expansion. To do so, Jasmine expects to issue new common stock. investment bankers have informed the company that flotation costs will be 6.5% of the total amount issued and that the company will incur another $576,000 in costs associated with the issue. Jasmine can issue its stock for $55 per share. Determine how many shares Jasmine must sell to net $345 million after flotation costs. Please and thank you! I always rate 5 stars!!!

Explanation / Answer

Total investment for future expansion = $345000000

Flotation cost = $345000000 * 6.5% = $22425000

Cost associated with issue = $576000

Total shares sell to get net investment after deducting flotation cost = ($345000000 - $22425000 - $576000) / $55

                                                                                                 = 5854527 shares

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