Question

The Whistling Straits Corporation needs to raise $91 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. If the offer price is $65 per share and the company’s underwriters charge a spread of 7 percent, how many shares need to be sold?

Answer 1

Answer:

The Whistling Straits Corporation needs 1,498,000 shares to be sold to raise $91 million.

Explanation:

Total Finance Needed  = $91,000,000

Offer price per share = $65 per share

Charges of underwriter = 7%

Total Number of shares needed to be sold = ( $91,000,000 / $65 ) x 107%

Total Number of shares needed to be sold = 1,400,000 x 107%

Total Number of shares needed to be sold = 1,498,000 shares

The Whistling Straits Corporation needs 1,498,000 shares to raise $91 million.