The Valhalla Corporation needs to raise $60 million to finance its expansion int

Question

The Valhalla Corporation needs to raise $60 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 $25 per share and the company's underwriters charge a spread of 7 percent. If the SEC filing fee and associated administrative expenses of the offering are $550,000, how many shares need to be sold? (Do not round intermediate calculations and round your final answer to nearest whole number. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567.)

Explanation / Answer

Offer Price per share=$25

underwriters charge a spread=7%

so Net amount collected per share=$25-7%*$25=$23.25

Net Fund required=$60,000,000

Total fund required=$60,000,000+$550,000=$60,550,000

so number shares to be issued=Total Fund Required/Net amount collected per share=$60,550,000/$23.25=2,604,301 Shares

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