Question

Criswell Mining shares trade at $18 per share and there are 200 million shares outstanding. The...

Criswell Mining shares trade at $18 per share and there are 200 million shares outstanding. The management would like to raise $100 million in an SEO. If the underwriter charges 5% of gross proceeds, how many shares must it sell?

Select one:

A. 5.56 million

B. 8.93 million

C. 5.85 million

D. 11.11 million

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Issue size fund required $           100.00
underwriter commission 5%
Fund issue gross of commission 100/(1-5%)
Fund issue gross of commission $           105.26
Share price $             18.00
Issue size in number of shares 105.26/18
Issue size in number of shares                   5.85 million
Hence option C is the correct answer.
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
On January​ 20, MetropolitanMetropolitan Inc. sold 1010 million shares of stock in an SEO. The market...
On January​ 20, MetropolitanMetropolitan Inc. sold 1010 million shares of stock in an SEO. The market price of MetropolitanMetropolitan at the time was $ 42.00$42.00 per share. Of the 1010 million shares​ sold, 55 million shares were primary shares being sold by the​ company, and the remaining 55 million shares were being sold by the venture capital investors. Assume the underwriter charges 5.5 %5.5% of the gross proceeds as an underwriting fee. a. How much money did MetropolitanMetropolitan ​raise?   b....
Amazing Growth Company shares currently trade at $108 per share. There are 24 million shares outstanding....
Amazing Growth Company shares currently trade at $108 per share. There are 24 million shares outstanding. If the shares are split 3-for-1, how many shares will be outstanding, and what value per share will they have (ignoring any other market changes)? 8 million shares; $324 per share 8 million shares; $36 per share 48 million shares; $54 per share 72 million shares; $36 per share Isnt it the first option?
Luther Industries currently has 100 million shares outstanding at a price of $25 per share. The...
Luther Industries currently has 100 million shares outstanding at a price of $25 per share. The company would like to raise money and has announced a rights issue. Every existing shareholder will be sent one right per share that he or she owns. The company plans to require twenty rights to purchase one share at a price of $20 per share. The amount of money that Luther will raise through its rights offering is closest to Select one: A. $100...
On January 20, Sullivan Inc., sold 9 million shares of stock in an SEO. The market...
On January 20, Sullivan Inc., sold 9 million shares of stock in an SEO. The market price of Sullivan at the time was $40.50 per share. Of the 9 million shares sold, 5 million shares were primary shares being sold by the company, and the remaining 4 million shares were being sold by the venture capital investors. Assume the underwriter charges 5.1% of the gross proceeds as an underwriting fee. a. How much money did Sullivan raise?   After underwriting fees,...
A company issues a $200 million IPO. The offer price is $5 per share. The underwriter’s...
A company issues a $200 million IPO. The offer price is $5 per share. The underwriter’s spread is 8%. The underwriter has agreed to a stand-by arrangement. For issuing the IPO, the company will pay some admin costs. The admin costs include a legal fee of $50,000, an accountant fee of $30,000 and other admin costs amounting to $170,000. The company’s share price increases by 10% at the end of the first day of trading. However, the offer has not...
Young Corporation stock currently sells for $30 per share. There are one million shares currently outstanding....
Young Corporation stock currently sells for $30 per share. There are one million shares currently outstanding. The company announces plans to raise $3 million by offering shares to the public at a price of $30 per share. a. If the underwriting spread is 9%, how many shares will the company need to issue in order to be left with net proceeds of $3 million? (Round your answer to the nearest whole.)   Number of shares     b. If other administrative costs...
An all-equity business has 100 million shares outstanding, selling for $20 a share. Management believes that...
An all-equity business has 100 million shares outstanding, selling for $20 a share. Management believes that interest rates are unreasonably low and decides to execute a dividend recapitalization. It will raise $1 billion in debt and repurchase 50 million shares. Assuming the Irrelevance Proposition holds, what is the market value of the firm after the recap? What is the market value of equity?
Young Corporation stock currently sells for $30 per share. There are 1 million shares currently outstanding....
Young Corporation stock currently sells for $30 per share. There are 1 million shares currently outstanding. The company announces plans to raise $5 million by offering shares to the public at a price of $30 per share. a. If the underwriting spread is 7%, how many shares will the company need to issue in order to be left with net proceeds (before other administrative costs) of $5 million ? (Do not round intermediate calculations. Round your answer to the nearest...
Raymond Mining Corporation has 8.4 million shares of common stock outstanding, 280,000 shares of 6 percent...
Raymond Mining Corporation has 8.4 million shares of common stock outstanding, 280,000 shares of 6 percent $100 par value preferred stock outstanding, and 141,000 7.50 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $32 per share and has a beta of 1.20, the preferred stock currently sells for $94 per share, and the bonds have 20 years to maturity and sell for 113 percent of par. The market risk premium is 7.2 percent, T-bills...
Titan Mining Corporation has 7.3 million shares of common stock outstanding, 265,000 shares of 4.5 percent...
Titan Mining Corporation has 7.3 million shares of common stock outstanding, 265,000 shares of 4.5 percent preferred stock outstanding, and 150,000 bonds with a coupon rate of 5.4 percent outstanding, par value $1,000 each. The common stock currently sells for $64 per share and has a beta of 1.20. The preferred stock has a par value of $100 and currently sells for $92 per share. The bonds have 16 years to maturity, pay semiannual coupons, and sell for 106 percent...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT