The underwiters compensation will be 5 of the issue price, Ask an Expert

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The Beranek Company, whose stock price is now $25, needs to raise $20 million in common stock. Underpreparers have informed the firm's management that they must price the new issue to the public at $22 per share because of signaling effects. The underwiters' compensation will be 5% of the issue price, so Beranek will net $20.90 per share. The firm will also incur expenses in the amount of $150,000. How many shares must the firm sell to net $20 million after underwriting and flotation expenses?

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Category:- Basic Finance
Reference No.:- M947519

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