Question

how much will a firm receive in net funding from a firm commitment underwriting of 250000 shares priced to the public at 40 if a 10% underwriting spread has been added to the price paid by the underwriter. additionally the firm pays 600000 in legal fees

Answer 1

Answer: $8,490,909

Step-by-step explanation:

10% was added to the $40. Price firm will receive is therefore;

= 40/ 1.10

= $36.36

The firm will receive;

= (Price * number of shares) - legal fees

= (36.36 * 250,000) - 600,000

= $8,490,909.09

= $8,490,909