Star Corporation, an auto fuel cell maker, is planning a new plant and needs to raise $30 million to finance it. The company plans to raise the money through a general cash offering priced at $23.50 a share. Star's underwriters charge a 6 percent spread. How many shares does the company have to sell to achieve its goal? (Round your final answer to the nearest unit of share.)

Question

Quizplus · Accepted Answer

The correct answer is A: 1,358,081 shares.The underwriters' spread is 6%, so the net proceeds from the offering will be 94% of the offering price. Therefore, the number of shares that need to be sold is $30,000,000 / (0.94 * $23.50) = 1,358,081 shares.

Star Corporation, an Auto Fuel Cell Maker, Is Planning a New