Authorized and available shares: Aspin Corporation's charter authorizes issuance of 2,700,000 shares of common stock. Currently, 1,100,000 shares are outstanding, and 400,000 shares are being held as treasury stock. The firm wishes to raise $105,000,000 for a plant expansion. Discussions with its investment bankers indicate that the sale of new common stock will net the firm $50 per share. a. What is the maximum number of shares of common stock that the firm can sell without receiving further authorization from shareholders? b. Judging by the data given and your finding in part a, do you think the firm will 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?
Authorized and available shares: Aspin Corporation's charter authorizes issuance of 2,700,000 shares of common stock. Currently, 1,100,000 shares are outstanding, and 400,000 shares are being held as treasury stock. The firm wishes to raise $105,000,000 for a plant expansion. Discussions with its investment bankers indicate that the sale of new common stock will net the firm $50 per share. a. What is the maximum number of shares of common stock that the firm can sell without receiving further authorization from shareholders? b. Judging by the data given and your finding in part a, do you think the firm will 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?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Authorized and available shares: Aspin Corporation's charter authorizes issuance of 2,700,000 shares of common stock. Currently, 1,100,000
shares are outstanding, and 400,000 shares are being held astreasury stock . The firm wishes to raise $105,000,000 for a plant expansion. Discussions with its investment bankers indicate that the sale of new common stock will net the firm $50 per share.
shares are outstanding, and 400,000 shares are being held as
a. What is the maximum number of shares of common stock that the firm can sell without receiving further authorization from shareholders?
b. Judging by the data given and your finding in part a, do you think the firm will 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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