Question: Don s Captain Morgan Inc needs to raise 12 5 million to
Don’s Captain Morgan, Inc. needs to raise $12.5 million to finance plant expansion. In discussions with its investment bank, Don’s learns that the bankers recommend an offer price (or gross proceeds) of $25.50 per share and Don’s will receive $23.75 per share. Calculate the underwriter’s spread on the issue. How many shares of stock will Don’s need to sell in order to receive the $12.5 million they need?
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