Devine Linens (DL) must raise $14,000,000 to support future growth. If it raises the funds by issuing stock, DL must pay an investment banker 5 percent of the total amount issued plus $250,000 in other costs associated with the issue. What is the amount of stock that DL must issue to net $14,000,000 after flotation costs?

Question

Quizplus · Accepted Answer

To net $14,000,000 after paying 5% of the total amount issued and $250,000 in other costs, we can set up the equation: Total Amount Issued - 5%(Total Amount Issued) - $250,000 = $14,000,000. Solving for the Total Amount Issued gives us $15,000,000.

Devine Linens (DL) Must Raise $14,000,000 to Support Future Growth