Neutrino Industries shares trade at $48 per share and there are 120 million shares outstanding. The management would like to raise $400 million in an SEO. If the underwriter charges 6% of gross proceeds, how many shares must it sell?

Question

Quizplus · Accepted Answer

To raise $400 million after a 6% underwriter fee, the company needs to raise $400 million / (1 - 0.06) = $425.53 million in gross proceeds. At $48 per share, it must sell $425.53 million / $48 ≈ 8.87 million shares.

Neutrino Industries Shares Trade at $48 Per Share and There