Advanced Composites Inc. (ACI) will be undertaking an IPO. The company needs to raise $90,000,000 net of all costs. ACI estimates this year's annual EPS to be $3.50. EPS is expected to grow by 6% thereafter. Although the company does not currently pay a dividend, it will begin to pay dividends based on a 20% payout ratio. ACI estimates that the beta for its competitors' stock ranges from 1.7 to 2.1. The risk-free rate is currently 3%, the market risk premium is 4%, and inflation is expected to be 1.5%. Flotation costs on the IPO will be 5.5%.
How many shares must ACI sell in the IPO to raise the required funds?