The Elkmont Corporation needs to raise $51.3 million to finance its expansion in

Question

The Elkmont Corporation needs to raise $51.3 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. The offer price is $29 per share and the company’s underwriters charge a spread of 8.5 percent. The SEC filing fee and associated administrative expenses of the offering are $1,453,000. (Enter your answer as directed, but do not round intermediate calculations.)

How many shares need to be sold? (Enter the whole number for your answer, not millions (e.g., 1,234,567). Round your answer to the nearest whole number (e.g., 1,234,567).)

The Elkmont Corporation needs to raise $51.3 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. The offer price is $29 per share and the company’s underwriters charge a spread of 8.5 percent. The SEC filing fee and associated administrative expenses of the offering are $1,453,000. (Enter your answer as directed, but do not round intermediate calculations.)

Explanation / Answer

Total capital to be raised = capital required*(1+spread rate)+SEC fees

=51300000*(1+0.085)+1453000

=57113500

Shares to be sold = Total capital to be raised /shar eprice = 57113500/29 = 1969431

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