The Educated Horses Corporation needs to raise $45 million to finance its expans

Question

The Educated Horses Corporation needs to raise $45 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 $40 per share and the company's underwriters charge an 10 percent spread. If the SEC filing fee and associated administrative expenses of the offering are $1,665,000, how many shares need to be sold? (Do not round your intermediate calculations.)

1,296,250

1,250,000

1,348,100

1,166,625

1,060,568

The Educated Horses Corporation needs to raise $45 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 $40 per share and the company's underwriters charge an 10 percent spread. If the SEC filing fee and associated administrative expenses of the offering are $1,665,000, how many shares need to be sold? (Do not round your intermediate calculations.)

Explanation / Answer

Shares need to be sold = 1,296,250 Shares

Sales Proceeds = [ $45,000,000 + $1,665,000 ] = x [ 1- 0.10 ]

$46,665,000 = x [ 1- 0.10 ]

x = $46,665,000 / 0.90

x = $51,850,000

Shares need to be sold = $51,850,000 / Offer price per share

= $51,850,000 / $40 per share

= 1,296,250 Shares

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