The net income of Steel City Corporation is $88,000. The company has 25,000 outstanding shares, and a 100 percent payout policy. The expected value of the firm one year from now is $1,770,000. The appropriate discount rate is 13 percent, and there are no taxes. At the dividend declaration meeting, several board members claimed that the dividend is too meager and is probably depressing the company's stock price. They proposed that the company sell enough new shares to finance a dividend of $4.72. If the proposal is adopted, at what price will the new shares sell? How many shares will be sold?
