You are negotiating with your underwriters in a firm commitment offering of 12 million primary shares....

Question

Question

You are negotiating with your underwriters in a firm commitment offering of 12 million primary shares. You have two options:

Answer 1

Answer #1

Net Price per share = Price per share – Underwriting spread

First option

Net Price = 24 – 6%*24 = $22.56

Second Option = 23.20 – 4% = $22.272

Hence, option 1 will raise more money

Answer 2

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