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ollegr [7]
3 years ago
11

Neutrino Industries stock trades at $49 per share and there are 120 million shares outstanding. The management would like to rai

se $400 million in an SEO. If the underwriter charges 6% of gross proceeds, how many shares must it sell?
Business
1 answer:
Gelneren [198K]3 years ago
4 0

Answer:

Neutrino Industries must sell <u>8.68 million shares</u> to raise $400 million.

Explanation:

To calculate this, let B represents the number of shares Neutrino Industries must sell. Therefore, we have:

Gross proceeds = $49 * B, or $49B

Underwriter charges = 6% * $49B = $2.94B

To raise $400 million, we deduct the underwriter charges from gross proceeds and solve for B as follows:

$49B – $2.94B = $400,000,000

$46.06B = 400,000,000

B = 400,000,000 / 46.06

B = 8,684,324.79 shares, or 8.68 million shares.

Therefore, Neutrino Industries must sell <u>8.68 million shares</u> to raise $400 million.

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