Flotation costs to use for its planned growth

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Reference no: EM131957168

1) Persian Rugs needs $600 million to support growth next year. If it issues new common stock to raise funds, the flotation (issuance) costs will be 4 percent. If Persian can issue stock at $125 per share, how many shares of common stock mus be issued so that it has $600 million after flotation costs to use for its planned growth?

2) Bearskin Rugs needs $115 million to build a new distribution center. If it issues common stock to raise the funds, the issuance costs will be 8 percent of the total amount issued. If Bearskin can issue stock at $40 per share, how many shares of common stock must be issued so that it has $115 million after flotation costs to use to fund the construction of its distribution center?

Reference no: EM131957168

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