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A company wishes to raise $400 million. If floatation costs are 3%, determine the total amount...

A company wishes to raise $400 million. If floatation costs are 3%, determine the total amount that has to be raised.

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Answer #1

Calculation of total amount that has to be raised:

Amount company wishes to raise= $400 million

Flotation cost= 3%

Total amount that has to be raised= amount company wishes to raise/(100%-flotation costs)

                                                 = 400million/(100%-3%)= 400/0.97= 412.371 million

So total amount that has to be raised= $412.371 million

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