Four Wheels requires $1.75 million to fund a new project and has decided to raise the funds via a seasoned stock offering.Assume the firm will incur $140,000 in indirect costs and pay 8.63 percent of the gross proceeds in direct costs.How much does the firm need to raise in total to cover all the issue costs as well as fund the new project?

Question

Quizplus · Accepted Answer

The firm needs to raise $1.75 million for the project, plus additional funds to cover both indirect and direct costs. The direct costs are 8.63% of the gross proceeds, and there are also $140,000 in indirect costs. Let's denote the total amount needed to be raised as X. The equation to solve is: X = $1.75 million + 0.0863X + $140,000. Solving for X gives us approximately $2,068,513.

Four Wheels Requires $1