1 answer

The Sullivan Co. needs to raise $78 million to finance its expansion into new markets. The...

Question:

The Sullivan Co. needs to raise $78 million to finance its expansion into new markets. The company will sell new shares of eq

The Sullivan Co. needs to raise $78 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 $31 per share and the company's underwriters charge a spread of 7 percent. The SEC filing fee and associated administrative expenses of the offering are $1,425,000. 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.) Number of shares offered

Answers

Required proceeds=(78,000,000+SEC filing fee and associated administrative expenses)/(1-spread)

=(78,000,000+1,425,000)/(1-0.07)=85403225.8

Hence required number of shares=85403225.8/31

which is equal to

=2754943 shares(Approx).

.

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