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    Number of Shares required to be sold

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    The Berenek Company, whose stock price is now $25, needs to raise $20 million in common
    stock. Underwritters have informed the firms management that they must price the new issue
    to the public at $22 per share because of signaling effects. The underwritters compensation will
    be 5% of the issue price so Beranek will net $20.90 per share. The firm will also incur expenses
    in the amount of $150,000.

    How many shares must the firm sell to net $20 million after underwriting and flotation expenses?

    Please see the attached excel file.

    © BrainMass Inc. brainmass.com October 9, 2019, 6:01 pm ad1c9bdddf
    https://brainmass.com/business/accounting-for-corporations/number-of-shares-required-to-be-sold-75768

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    The Berenek Company, whose stock price is now $25, needs to raise $20 million in common
    stock. Underwritters have informed the firms management that they must price the new issue
    to the ...

    Solution Summary

    This provides the steps to calculate the shares must the firm sell to net $20 million after underwriting and flotation expense

    $2.19