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Boat Emporium (BE) must raise $176 million. To do so, BE expects to issue new common stock. BE's investment banker will charge issuing costs equal to 12 percent of the total amount issued. If the stock can be issued for $80 per share, how many shares must BE sell to net $176 million after flotation costs. Round yout answer to the nearest whole number.

Respuesta :

Boat Emporium (BE) would need to issue 2,500,000 shares to net $176 million in share issuance proceeds

What does net $176 million after flotation costs mean?

The net $176 million after flotation costs implies that after the investment banker has deducted 12% of the total amount of shares issued, Boat Emporium (BE) would receive $176 million.

The fact that investment banker's charge is 12%, means that Boat Emporium (BE) is only entitled to 88% of the total amount raised(100%-12%)

In other words, we can convert the 88% of proceeds to 100%, the total amount raised to start with as shown below:

88% of proceeds=$176 million

proceeds=$176 million/88%

proceeds=$200 million

The total amount raised is the price per share multiplied by the number of shares issued

total amount raised=share price*shares issued

total amount raised=$200 million

share price=$80

shares issued=unknown(assume it is X)

$200 million=$80*X

X=$200 million/$80

X=2.50 million shares

Find out more about share issuance on:https://brainly.com/question/17190441

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