Question

# Problem 18-03 Calculating Costs of Issuing Stock (LG18-4) Husker’s Tuxedo’s, Inc. needs to raise \$260 million...

Problem 18-03 Calculating Costs of Issuing Stock (LG18-4) Husker’s Tuxedo’s, Inc. needs to raise \$260 million to finance its plan for nationwide expansion. In discussions with its investment bank, Husker’s learns that the bankers recommend an offer price (or gross price) of \$50 per share and they will charge an underwriter’s spread of \$2.25 per share. Calculate the net proceeds per share to Husker’s from the sale of stock. (Round your answer to 2 decimal places.) How many shares of stock will Husker’s need to sell in order to receive the \$260 million needed? (Round your final answer to the nearest whole number.)

a)Net proceeds per share = Gross price - underwriter's spread

= 50 - 2.25

= \$ 47.75per share

b)Number of shares to be sold = Proceeds to rais / Net proceeds per share

= 260,000,000 / 47.75

= \$ 5,445,026 shares rounded

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