Aspin Corporation's charter authorizes issuance of 2 comma 000 comma 000 shares of common stock. Currently, 1 comma 400 comma 000 shares are outstanding, and 100 comma 000 shares are being held as treasury stock. The firm wishes to raise $ 48 comma 000 comma 000 for a plant expansion. Discussions with its investment bankers indicate that the sale of new common stock will net the firm $60 per share. a. What is the maximum number of new shares of common stock that the firm can sell without receiving further authorization?

b. Judging on the basis of the data given and your finding in part a in part a, will the firm be able to raise the needed funds without receiving further authorization?

c. What must the firm do to obtain authorization to issue more than the number of shares found in part a?

Question

Blake

Business

21 February, 07:37

Aspin Corporation's charter authorizes issuance of 2 comma 000 comma 000 shares of common stock. Currently, 1 comma 400 comma 000 shares are outstanding, and 100 comma 000 shares are being held as treasury stock. The firm wishes to raise $ 48 comma 000 comma 000 for a plant expansion. Discussions with its investment bankers indicate that the sale of new common stock will net the firm $60 per share. a. What is the maximum number of new shares of common stock that the firm can sell without receiving further authorization?

b. Judging on the basis of the data given and your finding in part a in part a, will the firm be able to raise the needed funds without receiving further authorization?

c. What must the firm do to obtain authorization to issue more than the number of shares found in part a?

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Answers (1)

Know the Answer?

Valentin Shannon · Answer 1

a) it can sale up to 600,000 shares:

It can sale the 100,000 treasury stock and 500,000 new shares.

b) No. I cannot It requires 12,000,000 more dollars which is the equivalent to 240,000 shares

c) It will ammend the Certificate of Incorporation to allow the issue of additoinal shares of the state on which the company perform his activities.

Explanation:

B)

600,000 shares at $60 dollars per share = 36,000,000 dollars

financial requirement: 48,000,000 dollars

It fall short by 12,000,000 dollars

additional shares: 12,000,000 / 60 = 240,000