Use the Information for the Question(s)below

question 22

Multiple Choice

Use the information for the question(s) below.
Electronic Gaming Incorporated (EGI) is a firm with no debt and its 20 million shares are currently trading for $16 per share.Based on the prospects for EGI's new handheld video game,management feels the true value of the firm is $20 per share.Management believes that the share price will reflect this higher value after the video game is released next fall.EGI has already announced plans to raise $100 million from investors to build a new factory.
-Assume that EGI decides to wait until after the release of the new video game before they raise the $100 million through the issuance of new shares.The number of new shares that EGI will issue is closest to:

• A)1.6 million.
• B)5.0 million.
• C)10 million.
• D)6.25 million.

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Definitions:

Harvard Medical School

A globally prestigious medical school located in Boston, Massachusetts, known for its research, teaching, and clinical care.

Illusory

Something that appears real or possible but is neither, often due to being deceptive or misleading.

UCC

A complete series of legal guidelines known as the Uniform Commercial Code is in place to regulate all business dealings within the United States.

Counteroffer

A response to an offer in which the terms and conditions of the original offer are changed.