Chapter 3, Problem 20PROB

Summary Introduction

$U^3$ needs $192 million to support growth. To raise the needed funds, the flotation cost is 8% of the total issue value and other expenses are $280,000. The market price of each share is $25. 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.