Northern Importers wants to raise $58 million to expand its operations into South America.The company will sell new shares in a general cash offering.The underwriters charge a 7.8 per cent fee,the administrative costs are $411 000,and the offer price is $36 per share.How many shares must be sold if the firm is to raise the funds it desires?

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The correct answer is A.The number of shares that must be sold is calculated as follows:$58,000,000 / $36 per share = 1,611,111 sharesThe underwriters' fee is 7.8% of the proceeds, or $4,526,444. The administrative costs are $411,000. Therefore, the total cost of the offering is $4,937,444.The net proceeds from the offering are $58,000,000 - $4,937,444 = $53,062,556.The number of shares that must be sold is 1,611,111 shares + (4,526,444 / $36 per share) = 1,759,792 shares.

Northern Importers Wants to Raise $58 Million to Expand Its