EBK CFIN
6th Edition
ISBN: 9781337671743
Author: BESLEY
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 3, Problem 12PROB
Summary Introduction
PR needs $600 million to support growth. To raise the needed funds, the flotation cost is 4% of the total issue value. The market price of each share is $125. Calculate the number of outstanding shares.
Equity financing is the process of raising equity capital by issuing shares to investors due to short-term need or long-term goal or for the future growth of the firm.
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Global Gum Company (GGC) has decided to issue $150 million in common stock toraise funds to finance future growth. GGC’s stock currently sells for $25 per share.a. How many shares of stock does GGC plan to issue?b. If flotation costs are 8 percent, how much of the $150 million will GGC beable to use to fund growth?
The company needs to raise $40 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. If the offer price is $30 per share and the company's underwriters charge 12 percent spread, how many shares need to be sold?
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