Flotation Costs and Issue Size Complete problem 13-2 on page 433 of the text and
ID: 2667028 • Letter: F
Question
Flotation Costs and Issue SizeComplete problem 13-2 on page 433 of the text and submit to your instructor. Clearly label the calculation of the required ratios and solve using excel. Use formulas to calculate the ratios and format the cells to insert a comma if there is more than three numbers. Round to the nearest whole number. In each part summarize your analysis in a concise management statement not to exceed 100 words each.
PROBLEM 13-2
FLOTATION COSTS AND ISSUE SIZE
DATA
Needs to raise 10,000,000
Mrkt price 120.00
Flotation Costs $15.00
Net Price=
Dollar size =
How many shares=
Your firm needs to raise $10 million. Assuming that flotation costs are expected to be $15 per share, and that the market price of stock is $120, how many shares would have to be issued? What is the dollar size of the issue?
Explanation / Answer
Dollar size is nothing but collected amount.
Here dollar size = 10,000,000
Calculation for no of shares issued:
Net price pre share = $105
No of share issued = Raised finance/ Price per share.
=10,000,000/105
=95238.
Therefore no of shares issued is 95238.
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