Boat Emporium (BE) would need to issue 2,500,000 shares to net $176 million in share issuance proceeds
What does net $176 million after flotation costs mean?
The net $176 million after flotation costs implies that after the investment banker has deducted 12% of the total amount of shares issued, Boat Emporium (BE) would receive $176 million.
The fact that investment banker's charge is 12%, means that Boat Emporium (BE) is only entitled to 88% of the total amount raised(100%-12%)
In other words, we can convert the 88% of proceeds to 100%, the total amount raised to start with as shown below:
88% of proceeds=$176 million
proceeds=$176 million/88%
proceeds=$200 million
The total amount raised is the price per share multiplied by the number of shares issued
total amount raised=share price*shares issued
total amount raised=$200 million
share price=$80
shares issued=unknown(assume it is X)
$200 million=$80*X
X=$200 million/$80
X=2.50 million shares
Find out more about share issuance on:brainly.com/question/17190441
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