ASP, Inc. needs to raise $32 million to finance its expansion into new markets. The company will sell new shares of equity via a general cash offering to raise the needed funds. If the offer price is $45 per share and the company's underwriters charge a 7.5 percent spread, how many shares need to be sold?

Question

Quizplus · Accepted Answer

To find the number of shares needed, calculate the net proceeds per share after the underwriter's spread: $45 * (1 - 0.075) = $41.625. Then, divide the total amount needed by the net proceeds per share: $32,000,000 / $41.625 ≈ 768,769 shares.

ASP, Inc Needs to Raise $32 Million to Finance Its Expansion