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4 July, 23:16

The Whistling Straits Corporation needs to raise $80 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 $35 per share and the company's underwriters charge a spread of 5 percent. If the SEC filing fee and associated administrative expenses of the offering are $600,000, how many shares need to be sold? (Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to the nearest whole number, e. g., 1,234,567.)

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  1. 4 July, 23:29
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    Number of shares = 2,424,060 units

    Explanation:

    The number of shares to be sold can be worked back as follows:

    $

    Gross proceeds 80,000,000

    Administrative fees 600,000

    80,600,000

    Gross proceed inclusive of Underwriting fees

    = 80,600,000 / (100-8) %

    =84,842,105.26

    Number of shares to be sold = Gross proceeds/price per share

    =$84,842,105.26 / $35

    = 2,424,060.15

    Number of shares = 2,424,060 units
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