A company wants to raise $500 million in a new stock issue. Its investment banker indicates that the sale of new stock will require 8 percent under-pricing and a 7 percent spread. (Hint: the underpricing is 8% of the current stock price, and the spread is 7% of the issue price)
Assuming the company's stock price does not change from its current price of $75/share, how many shares must the company sell and at what price to the public?
