Highlander Homes shares trade at $32 per share and there are 50 million shares outstanding. The management would like to raise $200 million in an SEO. If the underwriter charges 5% of gross proceeds, how many shares must it sell?

Question

Quizplus · Accepted Answer

To raise $200 million, the company needs to sell:

$200 million / (1-5%) = $210.53 million (gross proceeds)

Number of shares needed to raise this amount at $32 per share:

$210.53 million / $32 per share = 6.58 million shares.

Highlander Homes Shares Trade at $32 Per Share and There