3-18

Bushwhacker mowing needs $360 million to support growth. If it issues new common stock to raise the funds, the flotation costs charged by the investment banker will be 4 percent. Additional costs associated with the issue will total $288,000. If Bushwhacker can issue stock at $60 per share, how many shares of common stock must be issued so that it has $360 million after flotation costs? Show how much of the issue will consist of flotation costs and how much Bushwhacker will receive after flotation costs are paid.