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Pawprints Paint recently went public in a best efforts offering. The company offered 155,000 shares of...

Pawprints Paint recently went public in a best efforts offering. The company offered 155,000 shares of stock for sale at an offer price of $25 per share. The administrative costs associated with the offering were $395,000 and the underwriter's spread was 7 percent. After completing their sales efforts, the underwriters determined that they sold a total of 148,700 shares. What were the net proceeds to the company?

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Answer #1
Assuming that underwritters not have obligation to to take unsold shares
Shares Price Amount
Issue 148700 25 3717500
Admin expenses 395000
Commission(7% on Issue price) 260225
Net proceedings 3062275
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