The Valhalla Corporation needs to raise $84 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 $50 per share and the company's underwriters charge a spread of 7 percent. If the SEC filing fee and associated administrative expenses of the offering are $850,000, how many shares need to be sold? (Do not round intermediate calculations and round your final answer to nearest whole number. Enter your answer in dollars, not millions of dollars, e. g., 1,234,567.)

Question

Brooks Yoder

Business

17 April, 08:27

The Valhalla Corporation needs to raise $84 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 $50 per share and the company's underwriters charge a spread of 7 percent. If the SEC filing fee and associated administrative expenses of the offering are $850,000, how many shares need to be sold? (Do not round intermediate calculations and round your final answer to nearest whole number. Enter your answer in dollars, not millions of dollars, e. g., 1,234,567.)

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Answers (1)

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Julian Bauer · Answer 1

It needs to sold 1,824,732 shares

Explanation:

we need 84,000,000 and also need to raise to cover the 850,000 expense

so total needs 84,850,000

then we will pay a 7% commision

so we need to have a gross raise of

84,850,000 / (1-0.07) = 91,236,559.14

Now, we diivde this by 50 which is the offered price of the shares:

91,236,559.14 / 50 = 1.824.731,182 = 1,824,732

we round to a whole numebr as we cannot issue half shares.