How much will a firm receive in net funding from an underwriting of 100,000 shares priced...
How much will a firm receive in net funding from an underwriting of 100,000 shares priced to the public at $30 if an 8% underwriting spread has been paid to the underwriter? Additionally, the firm pays $600,000 in legal fees
Homework Answers
The total amount receivable from issue of shares is (100,000*$30) = $3,000,000.
The expenses for the same is 8% underwriting fee and $600,000 legal fee.
Thus, the net amount receivable is:
![Net\, amount=\left [3,000,000\times \left ( 1-0.08 \right ) \right ]-600,000](http://img.homeworklib.com/questions/f5edf100-73be-11ea-b3cd-5fc58ca8f47e.png?x-oss-process=image/resize,w_560)
![Net\, amount=\left [3,000,000\times 0.92 \right ]-600,000](http://img.homeworklib.com/questions/f6438260-73be-11ea-b57d-b9e8e85a1aa8.png?x-oss-process=image/resize,w_560)
The net amount receivable is $2,160,000.
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How much will a firm receive in net funding from an underwriting
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