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Flotation Costs and Issue Size

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Question: Your firm needs to raise $10 million. Assuming that flotation costs are expected to be $15 per share and that the market price of the stock is $120, how many shares would have to be issued? What is the dollar size of the issue?

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Solution Summary

This solution briefly discusses flotation costs and provides calculations for the number of shares issued and dollar size of the issue.

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Flotation costs are the costs associated with the issuance of new securities. Flotation costs include both the underwriting spread and the costs ...

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