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The Whistling Straits Corporation needs to raise $72 million to finance its expansion into new markets....

The Whistling Straits Corporation needs to raise $72 million to finance its expansion into new markets. The company will sell new shares of equity via a general cash offering to raise the needed funds. If the offer price is $55 per share and the company’s underwriters charge a spread of 5 percent, how many shares need to be sold?

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Answer #1

Required proceeds net of spread=$72,000,000/(1-spread)

=$72,000,000/(1-0.05)=$75,789,473.68

Hence shares needed to be sold=$75,789,473.68/55

=1,377,990 (Approx).

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