Answer:
The number of shares needed to raise $26 miliion will be 590909 shares.
Explanation:
To calculate the number of shares needed to raise $26 million, we first need to findout the price per share at which shares are issued. The fair value or the price per share can be caclculated using the constant growth model of the DDM approach. Thus, the price per share today will be:
P0 = 2.46 / (0.1024 - 0.0465)
P0 = $44.007 rounded off to $44
Thus, at the price of $44 per share, number of shares needed to raise $26 million will be:
No of shares = 26,000,000 / 44 = 590909.0909 rounded off to 590909 shares
Answer:
CSD must issue 590 775 sharesof stock
Explanation:
The market value of any firm is given by number of shares multiplied by the stock price so in this case we want $26 mil we nees number of shares the given information D1 $2.46, g 4.65% and r 10.24% will help us get the stock price in which will help in getting the exact number of shares to be issued
We will use the Gordon Growth Model to calculate the stock price
SP = D1/r -g
=2.46/ 0.1024-0.0465
=$44.01
Goal raise $26mil
26000000=stock price * number of share
26000000=44.01*number of shares
number of shares =26000000/44.01=590 775 shares
Explanation:
