Question 11 Determine (a)how much capital is to be raised and (b) how many shares Warren must sell to net the $250 million after flotation costs in raising new capital? Warren Inc. has a financial need to expand its business to new markets. Thus, it must raise $250 million. To do so, Warren Inc. expects to issue new common stock. Investment bankers have informed the company the flotation costs will be 5 percent of the total amount issued plus $500,000 in additional costs associated with the issue. Warren can issue its stock for $80 per share.

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Determine (a)how much capital is to be raised and (b) how many shares Warren must sell to net the $250 million after flotation costs in raising new capital? Warren Inc. has a financial need to expand its business to new markets. Thus, it must raise $250 million. To do so, Warren Inc. expects to issue new common stock. Investment bankers have informed the company the flotation costs will be 5 percent of the total amount issued plus $500,000 in additional costs associated with the issue. Warren can issue its stock for $80 per share