Question: The Pandora Internet Radio Company was started in 2000 to
The Pandora Internet Radio Company was started in 2000 to provide a personalized radio listening experience over your computer or iPhone and is privately owned. However, its success could easily lead its owners to take the company public with the sale of common stock to the public. When companies sell common stock for the first time the flotation cost can be very high. If Pandora needs $75 million to finance an acquisition and sells shares to the public, how much stock would it have to sell if flotation costs are expected to be 15 percent?
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