Magenta Corporation wants to raise $51.8 million in a seasoned equity offering, net of all fees. Magenta stock currently sells for $10per share. The underwriters will require a spread of $0.5 per share, and indicate that the issue must be underpriced by 4 percent. Inaddition to the underwriter's fee, the firm will incur $2,800,000 in legal, accounting, and other costs. How many shares must Magentasell?Note: Enter your answer in millions rounded to 3 decimal places.Number of sharesmillion

1. First, let's calculate the underwriter's fee. The spread per share is $0.5. The issue must be…

Answered: Magenta Corporation wants to raise…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter18: Initial Public Offerings, Investment Banking, And Capital Formation

Section: Chapter Questions

Problem 2P

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