Calculating Costs of Issuing Stock WuShock,Inc

question 113

Multiple Choice

Calculating Costs of Issuing Stock WuShock,Inc.,needs to raise $500 million to finance its plan for nationwide expansion.In discussions with its investment bank,WuShock learns that the bankers recommend an offer price (or gross price) of $50 per share and they will charge an underwriter's spread of $2.00 per share.Calculate the net proceeds to WuShock from the sale of stock.How many shares of stock will WuShock need to sell in order to receive the $500 million they need?

• A)10,000,000
• B)10,416,667
• C)250,000,000
• D)500,000,000

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Definitions:

Resources

Inputs used in the production of goods and services, such as labor, capital, land, and entrepreneurship.

Marginal Rate

The rate at which one variable changes relative to a change in another variable, often used in the context of taxes or production costs.

Transformation

The process of changing something from one form or state to another, often seen in context with business, personal development, or technology.

Unemployment

The situation when people who are willing to work at prevailing wage rates cannot find employment.