Global Geotell just hired InvestPro, a local investment banker, to help it issue common stock. The proceeds of the stock offering will be used for research and development of a new satellite tracking system for the US Navy. The market value of the issue equals $150 million, direct costs incurred by Global Geotell will amount to $225,000 and InVestPro charges a 7 percent fee for it's services.
a. What will the net proceeds to Global Geotell from the $150 million equity issue? That is, how much of the issue will Global Geotell be able to use?
b. If the price per share of the common stock equals $25 at the time of issue, how many shares of stock must be issued if the total value of the issue is $150 million?
c. How many shares of stock must be issued if Global Geotell actually needs $150 million for its research and development? Assume that the price is $25 per share.

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jwagner11341 jwagner11341

25-11-2022
Business

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Global Geotell just hired InvestPro, a local investment banker, to help it issue common stock. The proceeds of the stock offering will be used for research and development of a new satellite tracking system for the US Navy. The market value of the issue equals $150 million, direct costs incurred by Global Geotell will amount to $225,000 and InVestPro charges a 7 percent fee for it's services.
a. What will the net proceeds to Global Geotell from the $150 million equity issue? That is, how much of the issue will Global Geotell be able to use?
b. If the price per share of the common stock equals $25 at the time of issue, how many shares of stock must be issued if the total value of the issue is $150 million?
c. How many shares of stock must be issued if Global Geotell actually needs $150 million for its research and development? Assume that the price is $25 per share.

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Yogeshkumari Yogeshkumari · Answer 1 · 2022-11-30T08:36:40+01:00

a. The net proceeds to Global Geotell from the $150 million equity issue is $139,275,000

b. If the price per share of the common stock equals $25 at the time of issue, then the total number of shares is 6 million

c. There are 6 million shares of stock must be issued if Global Geotell actually needs $150 million for its research and development.

Stock:

The stock is the general term used to describe the ownership certificates of any company

Given,

Global Geotell just hired InvestPro, a local investment banker, to help it issue common stock. The proceeds of the stock offering will be used for research and development of a new satellite tracking system for the US Navy. The market value of the issue equals $150 million, direct costs incurred by Global Geotell will amount to $225,000 and InVestPro charges a 7 percent fee for it's services.

The net proceeeds to Global Geotell is calculated as,

=> $150 million - (0.07*$150 million) - $225,000 = $139,275,000

If the price per share of the common stock equals $25 at the time of issue, then the number of shares for $150 million is,

=> 150 million / 25

=> 6 million.

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