ASP, Inc. needs to raise $43 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. The SEC filing fee and associated administrative expenses of the offering are $389,000. If the offer price is $38 per share and the company's underwriters charge a spread of 8 percent, how many shares need to be sold?

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The correct answer is A.The number of shares that need to be sold is calculated as follows:Total funds needed = $43 millionSEC filing fee and administrative expenses = $389,000Total funds to be raised from the offering = $43,389,000Offer price per share = $38Underwriters' spread = 8%Net proceeds per share = $38 * (1 - 0.08) = $34.96Number of shares to be sold = Total funds to be raised from the offering / Net proceeds per share= $43,389,000 / $34.96= 1,241,104 shares

ASP, Inc Needs to Raise $43 Million to Finance Its Expansion