Highlander Homes stock trades at $35 per share and there are 50 million shares outstanding. The management would like to raise $300 million in an SEO. If the underwriter charges 5% of gross proceeds, and all the shares are primary shares sold to new investors, what percentage of the company will be owned by the new investors?

Question

Quizplus · Accepted Answer

D) Sale price of new share = $35 × (100% - 5%) = $33.25;
Number of shares sold = $300 million / $33.25 = 9.02255639 million shares
Percentage owned by new shareholders = 9.02255639 million / (50 million + 9.02255639 million) = 15.29%

Highlander Homes Stock Trades at $35 Per Share and There