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Raybac is about to go public. Its present stockholders own 420,000 shares. The new public issue...

Raybac is about to go public. Its present stockholders own 420,000 shares. The new public issue will represent 990,000 shares. The shares will be priced at $40 to the public with a 6% spread. The out-of pocket costs will be $580,000. What are the net proceeds to the firm?

$36,644,000

$36,659,000

$-2,960,960

$36,649,000

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Answer #1

Option a)

Net proceeds to the firm=Number of shares in new issue*share price*(1-spread)-out of pocket costs=990000*40*(1-6%)-580000=36644000

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