Question

The Elkmont Corporation needs to raise $52.2 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 $38 per share and the company’s underwriters charge a spread of 7 percent. The SEC filing fee and associated administrative expenses of the offering are $1,462,000.
  
What are the required proceeds from the sale necessary for the company to pay the underwriter's spread and administrative costs? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Round your answer to the nearest whole number, e.g., 32.)
  
Required proceeds            $
  
How many shares need to be sold? (Do not round intermediate calculations and enter your answer in shares, not millions of shares, e.g., 1,234,567. Round your answer to the nearest whole number, e.g., 32.)
  
Number of shares offered

Answer 1

Funds required	52,200,000
SEC and other admin cost	1,462,000
Total Funds required after commission	53,662,000
Total Funds required before commission	53662000/(1-7%)
Total Funds required before commission	57,701,075
Price per share	38
Total No of shares to be issued	57701075/38
Total No of shares to be issued	1,518,449