The Educated Horses Corporation needs to raise $40 million to finance its expans

Question

The Educated Horses Corporation needs to raise $40 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 $30 per share and the company's underwriters charge an 8 percent spread. If the SEC filing fee and associated administrative expenses of the offering are $1,080,000, how many shares need to be sold? (Do not round your intermediate calculations.) O 1,488,406 O 1,449.275 O 1,267901 O 1,547942 O 1,369,333

Explanation / Answer

A Offer price per share $30 B Underwriting spread 8% C=A*B Underwtiting Cost per share $2.40 D=A-C Amount receipt per share after underwriting cost $27.60 E Amount required to be raised $40,000,000 F SEC filing fees and associated expenses $1,080,000 G=E+F Total amount required excluding underwriting cost $41,080,000 H=G/D Number of shares need to be sold 1488405.797 Number of shares need to be sold            1,488,406 Answer: 1,488,406

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