Problem:
R and R company currently has net income of $3 million and 1. million common shares outstanding which sell for $20 per share. R and R has decided to issue new stock to raise $4,000,000 to expand its operations. Rand R investment banker will sell the new shares for $18 per share with a spread of 7%. There will be a $60,000 registration cost.
Q1. Calculate the current EPS and PE ratio
Q2. How many shares will have to be sold to net the $4,000,000 that R and R needs?
Explain?