Vall Street Inc has raised $5 million in an equity financing round last year at a price of $16.667/share. Vall Street identifies a new business opportunity for $10 million and elects to finance this with a new equity raise. Investment banks advise that post raise, Vall Street's equity will be worth $40 million due to all the new business potential. What is the share price of the newly issued shares?
Vall Street Inc has raised $5 million in an equity financing round last year at a price of $16.667/share. Vall Street identifies a new business opportunity for $10 million and elects to finance this with a new equity raise. Investment banks advise that post raise, Vall Street's equity will be worth $40 million due to all the new business potential. What is the share price of the newly issued shares?
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter18: Initial Public Offerings, Investment Banking, And Capital Formation
Section: Chapter Questions
Problem 9MC
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