Question

"Pawprints Paint recently went public in a best efforts offering. The company offered 160,000 shares of stock for sale at an offer price of $26 per share. The administrative costs associated with the offering were $400,000 and the underwriter's spread was 8 percent. After completing their sales efforts, the underwriters determined that they sold a total of 153,700 shares. What were the net proceeds to the company

Answer 1

Net proceeds $3,356,808

Step-by-step explanation:

The net proceeds to the company would be the gross proceeds from the issue less the underwriting costs and the administrative cost

$

Gross proceeds (153,700 × $26) 3,996,200

Underwriting spread( 8%× 3,996,200) (319,696)

Administrative cost ( 400,000)

Net proceeds 3,356,808