Regina Respiratory Devices stock trades at $21 per share and there are 14 million shares outstanding.The management would like to raise $80 million in an SEO.If the underwriter charges 5% of gross proceeds,how many shares must it sell?

Question

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To raise $80 million after a 5% underwriting fee, the company needs to raise $80 million / (1 - 0.05) = $84.21 million in gross proceeds. At $21 per share, they need to sell $84.21 million / $21 = 4 million shares.

Regina Respiratory Devices Stock Trades at $21 Per Share and There