Don’s Captain Morgan, Inc., needs to raise $14.00 million to finance plant expan

Question

Don’s Captain Morgan, Inc., needs to raise $14.00 million to finance plant expansion. In discussions with its investment bank, Don’s learns that the bankers recommend an offer price (or gross proceeds) of $21.90 per share and Don’s will receive $19.65 per share.

Calculate the underwriter’s spread per share on the issue. (Round your answer to 2 decimal places.)

How many shares of stock will Don’s need to sell in order to receive the $14.00 million it needs?

Don’s Captain Morgan, Inc., needs to raise $14.00 million to finance plant expansion. In discussions with its investment bank, Don’s learns that the bankers recommend an offer price (or gross proceeds) of $21.90 per share and Don’s will receive $19.65 per share.

Explanation / Answer

a.

Underwriter spread per share = Offer Price - Net Amount receive

= $21.90 - $19.65

= $2.25

Underwriter spread per share is $2.25.

b.

Number of share sold = Total Amount required / Net proceeds per share

= $14,000,000 / $19.65

= 712,468

Total Number of share need to issue is 712,468.

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.