A company wants to raise 500 million in a new stock issue, Ask an Expert

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A company wants to raise $500 million in a new stock issue. Its investment banker indicates that the sale of new stock will require 8 percent underpricing and a 7 percent spread.

a. Assuming the company's stock price does not change from its current price of $75 per share, how many shares must the company sell and at what price to the public?

b. How much money will the investment banking syndicates earn on the sale?

c. is the 8 percent underpricing a cash flow? is it a cost?

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Basic Finance, Finance

Category:- Basic Finance
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