Nuran Security Systems, Inc. needs to raise $150 million for asset expansion. As it raises the capital
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Nuran’s will also issue new shares of stock to support this asset growth. Nuran’s investment bank will use a firm commitment offering in which the net proceeds are $23.875 per share and the underwriter’s spread is 7 percent of the gross proceeds. Nuran Security Systems will also pay legal and other administrative costs of $750,000 for the stock issue.
Calculate the amount of debt and equity funding Nuran Security Systems will need to keep its current debt ratio constant and the number of shares of stock the firm must issue to raise the needed funds. What can Nuran Security Systems, Inc. expect to pay for fees on this loan commitment and stock issue?
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Related Book For
Finance Applications and Theory
ISBN: 978-0077861681
3rd edition
Authors: Marcia Cornett, Troy Adair
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