The Taussig Company, whose stock price is currently $20.50, needs to raise $15 million by issuing common stock. Underwriters have informed Taussig’s management that it must price the new issue to the public at $20 per share to ensure that all shares will be sold. The underwriters’ compensation will be 7 percent of the issue price, so Taussig will net $18.60 per share. The company will also incur expenses in the amount of $252,000. How many shares must Taussig sell to net $15 million after underwriting and flotation expenses?
The Taussig Company, whose stock price is currently $20.50, needs to raise $15 million by issuing common stock. Underwriters have informed Taussig’s management that it must price the new issue to the public at $20 per share to ensure that all shares will be sold. The underwriters’ compensation will be 7 percent of the issue price, so Taussig will net $18.60 per share. The company will also incur expenses in the amount of $252,000. How many shares must Taussig sell to net $15 million after underwriting and flotation expenses?
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter18: Initial Public Offerings, Investment Banking, And Capital Formation
Section: Chapter Questions
Problem 2P
Related questions
Question
The Taussig Company, whose stock price is currently $20.50, needs to raise
$15 million by issuing common stock. Underwriters have informed Taussig’s management
that it must price the new issue to the public at $20 per share to ensure
that all shares will be sold. The underwriters’ compensation will be 7 percent of the
issue price, so Taussig will net $18.60 per share. The company will also incur
expenses in the amount of $252,000. How many shares must Taussig sell to net
$15 million after underwriting and flotation expenses?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning