Nunavut Mining Company stock trades at $3.25 per share and there are 46 million shares outstanding.The management would like to raise $50 million in an SEO.If the underwriter charges 6% of gross proceeds,how many shares must it sell?

Question

Quizplus · Accepted Answer

To raise $50 million with a 6% underwriting fee, the company needs to net $50 million from the gross proceeds. The gross proceeds needed can be calculated as $50 million / (1 - 0.06) = $53.191 million approximately. At $3.25 per share, the number of shares to be sold is $53.191 million / $3.25 ≈ 16.36 million shares, which rounds to 16.4 million shares.

Nunavut Mining Company Stock Trades at $3