Question

Management of Carla Vista, Inc., is planning to raise $1,215,000 in new equity through a private placement. If the sale price is $20.25 per share, how many shares does the company have to issue

Answer 1

Answer:

Number of shares to be issued =  60,000  units

Explanation:

A private placement involves the issue of new shares to a few number of individual and institutional investors. Unlike initial public offering, here the shares are not offered to the general public.

The number of units to be issued is determined as follows

Units to be issued = Total capital to be raised / issue price per share

Number of units to be raised = $1215,000/$20.25 per share= 60,000  units

Number of shares to be issued =  60,000  units