Blue Dragon, Inc., needs to raise $600 million to finance its plan for nationwide expansion. In discussions with its investment bank, Blue Dragon learns that the bankers recommend an offer price (or gross price) of $60 per share and they will charge an underwriter's spread of $3.00 per share. Calculate the net proceeds to Blue Dragon from the sale of stock. How many shares of stock will Blue Dragon need to sell in order to receive the $600 million they need?

Question

Quizplus · Accepted Answer

To calculate the net proceeds per share, subtract the underwriter's spread from the offer price: $60 - $3 = $57 per share. To raise $600 million, divide the total amount needed by the net proceeds per share: $600,000,000 / $57 = 10,526,316 shares.