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Home Q & A Board Other Fields Homework Help Business Finance
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Memphic Memphic
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6 years ago
Assume that EGI decides to raise the $100 million through the issuance of new shares prior to the release of the new video game.  EGI's share price following the release of the new video game will be closest to:
A) $18.00
B) $19.00
C) $20.00
D) $16.00
Textbook 
Corporate Finance: The Core

Corporate Finance: The Core


Edition: 4th
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#1
6 years ago
B
Explanation:  B) shares =   = 6,250,000 new shares

Total shares = 20M (existing) + 6.25M new = 26.25 million.

Total Value = existing value + $100M new factory
Total Value = $20 per share (true value) × 20 million shares + $100 = $500 million

Price per share =   = $19.05
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