The Zuri Co. needs to raise $65.1 million to finance its expansion into new mark

Question

The Zuri Co. needs to raise $65.1 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. The offer price is $51 per share and the company’s underwriters charge a spread of 8.5 percent.

How many shares need to be sold? (Do not round intermediate calculations and enter your answer in shares, not millions of shares, e.g., 1,234,567. Round your answer to the nearest whole number, e.g., 32.)

Number of shares offered

Explanation / Answer

Number of shares offered : 1,395,050 shares

Value of shares offered = Funds needed / ( 1 - Spread % ) = $ 65,100,000 / ( 1 - 0.085) = $ 71,147,541

Number of shares to be offered = Value of Shares offered / Offer price per share = $ 71,147,541 / $ 51 = 1,395,050

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