1 Once upon a time, when you bought broccoli you bought the whole vegetable, stems and crowns. Then it became customary for grocery store produce departments to separate the crowns from the stems and to sell the crowns at a premium. 2  Iâm not a fan of this practice, because I like both parts of the broccoli plant.
A company's first issue of common stock to the public is called an Initial Public Offering. Afterwards, a corporation may issue new equity at any time in order to finance its growth. When new common shares are offered to existing shareholders first, this is called a rights offering.
The key to this problem is to recognize that the cash a company receives when it issues stock is based on the number of share issued and the market price per share. Since the company wants to receive $80,000 when it issues the 10,000 shares, it must receive $8 per share for the shares.