Sipe's Paint and Wallpaper, Inc., needs to raise $1 million to finance plant expansion. In discussions with its investment bank, Sipe's Paint and Wallpaper learns that the bankers recommend a gross price of $40 per share and that 30,000 shares of stock be sold. If the net proceeds on the stock sale leave Sipe's Paint and Wallpaper with $1 million, what percent of the total raised represents net proceeds to the firm?

Question

Quizplus · Accepted Answer

The total amount raised from the sale of 30,000 shares at a gross price of $40 per share is 30,000 * $40 = $1,200,000. If the net proceeds to Sipe's Paint and Wallpaper are $1 million, then the net proceeds represent $1,000,000 / $1,200,000 = 83.33% of the total raised.