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The Scandrick Corporation needs to raise $91 million to finance its expansion into new markets. The...

The Scandrick Corporation needs to raise $91 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. If the offer price is $65 per share and the company’s underwriters charge a spread of 7 percent, how many shares need to be sold? (Do not round intermediate calculations and enter your answers in shares, not millions of shares, rounded to the nearest whole number, e.g., 1,234,567.)

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Answer #1

Amount needs to be raised = $ 91 million

Spread charges = 7%

Offer price = $65

Total amount raised*(1-Spread) = Amount of funds needed

Total amount raised*(1-0.07) = $91 million

Total amount raised = $91 million/0.93

Total amount raised = $ 97,849,462

No of shares needs to be sold = Total amount raised/Offer price

= $ 97,849,462/$65

= 1505,376 shares

So, 1505,376 shares need to be sold to raise $ 91 million.

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