Wildcat, Inc., needs to raise $750 million to finance its plan for nationwide expansion. In discussions with its investment bank, Wildcat learns that the bankers recommend an offer price (or gross price) of $25 per share and they will charge an underwriter's spread of $1.50 per share. Calculate the net proceeds to Wildcat from the sale of stock. How many shares of stock will Wildcat need to sell in order to receive the $750 million they need?

Question

Quizplus · Accepted Answer

The net proceeds per share to Wildcat are $25 - $1.50 = $23.50. To raise $750 million, Wildcat needs to sell $750 million / $23.50 per share = 31,914,894 shares.