Firm X needs to net $12,800,000 from the sale of common stock. Its investment banker has informed the firm that the retail price will be $22 per share, and that Firm X will receive $18.50 per share. Out-of-pocket costs are $250,000. How many shares must be sold to achieve the desired net to the issuing firm? (Round up answer to nearest whole number)
A) 581,526
B) 654,545
C) 659,091
D) 705,406

Question

Quizplus · Accepted Answer

Amount needed = $12,800,000
Total shares to be sold to net $12,800,000
= ($12,800,000 + issue costs)/net price per share
= $13,050,000/$18.50 per share = 705,406 shares

Firm X Needs to Net $12,800,000 from the Sale of Common