Question

Framingham Company wants to finance its expansion by selling 200,000 shares of stock at $35.20 each. The underwriting commission will be 5.5 percent of the value of the stock. Accounting, legal, and printing fees are $142,985. What is the total selling expense?

Answer 1

Given:
200,000 shares fo stock at 35.20 each
5.5% underwriting commission
accounting, legal, and printing fees = 142,985

200,000 x 35.20 = 7,040,000
7,040,000 x 5.5% = 387,200

underwriting commission: 387,200
accounting, legal, and printing fees: 142,985
total selling expenses: 530,185