nwosa networks needs $35.1 million to update its equipment. the underwriters set the stock price at $36.50 per share with an underwriting spread of 7.25 percent. this would be a firm commitment underwriting. the estimated issue costs are $391,000. how many shares of stock must be sold to finance this project?

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27-10-2022
Business

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nwosa networks needs $35.1 million to update its equipment. the underwriters set the stock price at $36.50 per share with an underwriting spread of 7.25 percent. this would be a firm commitment underwriting. the estimated issue costs are $391,000. how many shares of stock must be sold to finance this project?

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rafikiedu09 rafikiedu09 · Answer 1 · 2022-11-01T13:02:04+01:00

It is necessary to sell 1048363 shares of stock to pay for this undertaking.

The shares repurchased are deducted from the total shares issued so far in the calculation of shares outstanding.

Earnings per share (EPS) is calculated by dividing a company's net profit by the total number of outstanding common shares. A common figure for estimating corporate worth is earnings per share, which demonstrates how much profit a company generates for each share of its stock.

Amount to raise = 35100000

Offer price per share = $36.50

Underwriting Charge = 7.25%

Therefore, net income per share = 36.50 × (1- 7.25%)

= $33.85375

Issue cost = $391,000

Number of shares offered = (Unit amount + Issue cost) ÷ Net income per share

= (35100000 + 391000) ÷ 33.85375

= 1048362.44138

To learn more about net income

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