Computation of number of shares to be issued for purchase

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Computation of the number of shares to be issued for purchase of the machinery.

The Pasta Maker needs to raise $16 million to update its machinery. Management estimates that it will cost the firm $240,000 for accounting, legal, and other costs related to the issuance of securities for this purpose. The underwriting spread is 8 percent and the issue price is $24 a share. How many shares of stock must The Pasta Maker sell to finance its new machinery?

a) 626,543 shares

b) 676,667 shares

c) 735,507 shares

d) 748,211 shares

e) 794,348 shares

Reference no: EM1311077

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