How many shares must the firm sell to net

Assignment Help Financial Management

Reference no: EM131054824

The Beranek Company, whose stock price is now $20, needs to raise $20 million in common stock. Underwriters have informed the firm's management that they must price the new issue to the public at $16 per share because of signaling effects. The underwriters' compensation will be 5% of the issue price, so Beranek will net $15.20 per share. The firm will also incur expenses in the amount of $155,000.

How many shares must the firm sell to net $20 million after underwriting and flotation expenses? Round your answer to the nearest whole number.

Reference no: EM131054824

Questions Cloud

Fixed asset is fully depreciated over life of the project : A five-year project has an initial fixed asset investment of $290,000, an initial NWC investment of $26,000, and an annual OCF of −$25,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required re..

The risk premium on the stock market : Suppose that the inflation rate is expected to be 3% in the near future. Using the historical data provided in this chapter, what would be your predictions for: a. the t-bill rate b. The expected rate of return on the Big/Value portfolio? c. The risk..

How much cash will zang raise net of the spread : Zang Industries has hired the investment banking firm of Eric, Schwartz, & Mann (ESM) to help it go public. Zang and ESM agree that Zang's current value of equity is $61 million. Zang currently has 4 million shares outstanding and will issue 1.6 mill..

How many additional shares must benjamin sell to the angel : Benjamin Garcia's start-up business is succeeding, but he needs $209,000 in additional funding to fund continued growth. Benjamin and an angel investor agree the business is worth $836,000 and the angel has agreed to invest the $209,000 that is neede..

How many shares must the firm sell to net : The Beranek Company, whose stock price is now $20, needs to raise $20 million in common stock. Underwriters have informed the firm's management that they must price the new issue to the public at $16 per share because of signaling effects. How many s..

Calculate variance and standard deviation of the returns : Suppose that the standard deviation of returns from a typical share is about 0.55 (or 55%) a year. The correlation between the returns of each pair of shares is about 0.4. Calculate the variance and standard deviation of the returns on a portfolio th..

Brickhouse is expected to pay annual dividends : Brickhouse is expected to pay annual dividends of $1.90 and $2.10 over the next two years, respectively. After that, the company expects to pay a constant dividend of $2.30 a share. What is the value of this stock at a required return of 16 percent?

Lowest expected level of sales quantity : Which one of the following is a correct value to use if you are conducting a best-case scenario analysis? Sales price that is most likely to occur, Lowest expected level of sales quantity, Lowest expected salvage value

Cash flow amount to use initial investment in fixed assets : Parker & Stone, Inc., is looking at setting up a new manufacturing plant in South Park to produce garden tools. The company bought some land six years ago for $4.5 million in anticipation of using it as a warehouse and distribution site, but the comp..

User Account

All Pages