Amada Inc. is a leading Lebanese retail company that operates franchise concepts in fashion and accessories. It wants to expand its business internationally. The proposed expansion would require the firm to raise about $20,5 million in new capital. Because Armada currently has a debt ratio of 35% and because current shareholders already have all their personal wealth invested in the company, they would like to sell common stock to the public to raise the $20.5 million. However, the current shareholders want

to retain voting control The estimated pre-IPO value of equity of the company is about 72 million and there are 4.5 million of existing shares of stock held by current shareholders. The investment bank will charge a 7 spread.

1.To net $20.5 million, what is the total value of stocks that must be sold (approximately)?

2. What percentage of shares will the new investors require?

3. How many shares will the new investors require (approximately)?

4. What is the estimated offer price per share?

5. What is the total post-IPO value of equity?