Question

RED Save & Exit Subm An Investment bank agrees to underwrite an issue of 15 million shares of stock for Looney Landscaping Corp. Check my work a. The investment bank underwrites the stock on a firm commitment basis, and agrees to pay $10.00 per share to Looney Landscaping Corp. for the 15 million shares of stock. The Investment bank then sells those shares to the public for $11.50 per share. How much money does Looney Landscaping Corp. receive? What is the profit to the Investment bank? If the investment bank can sell the shares for only $8.50, how much money does Looney Landscaping Corp. receive? What is the profit to the investment bank? b. Suppose, instead, that the investment bank agrees to underwrite the 15 million shares on a best efforts basis. The investment bank is able to sell 13.5 million shares for $10.00 per share, and it charges Looney Landscaping Corp. $0.325 per share sold. How much money does Looney Landscaping Corp. receive? What is the profit to the investment bank? If the investment bank can sell the shares for only $8.50, how much money does Looney Landscaping Corp. receive? What is the profit to the Investment bank? (For all requirements, enter your answers in dollars, not in millions. Negative amounts should be Indicated by a minus sign.) Amount received by Looney Landscaping Corp. @ $10.00 per share Investment banker's profit if shares are sold @ $11,50 per share Amount received by Looney Landscaping Corp. @ $8.50 per share Investment banker's profit if shares are sold @ $8.50 per share Amount received by Looney Landscaping Corp. $10.00 per share Investment banker's profit if shares are sold @ $10.00 per share Amount received by Looney Landscaping Corp. @ $8.50 per share Investment banker's profit if shares are sold @ $8.50 per share < Prev 2 of 10 Next > 23 12 -7 NOAP Ow7

Answer 1

		No. of Shares Sold	Value per Share	Expense/payment per share	Net Receivable/Profit (+) or Loss(-)
		(A)	(B)	(C )	(A)*(B-C)=D
a	Amount Reecived by Looney Landscape Corp. @$ 10 per share	15,000,000	10.000	-	150,000,000
	Investment banker's Profit if the Share sold @$11.50 per Share	15,000,000	11.500	10.000	22,500,000
	Amount Reecived by Looney Landscape Corp. @$ 8.5 per share	15,000,000	10.000	-	150,000,000
	Investment banker's Profit if the Share sold @$8.50 per Share	15,000,000	8.500	10.000	-22,500,000
b	Amount Reecived by Looney Landscape Corp. @$ 10 per share	13,500,000	10.000	0.325	130,612,500
	Investment banker's Profit if the Share sold @$11.50 per Share	13,500,000	0.325	-	4,387,500
	Amount Reecived by Looney Landscape Corp. @$ 8.5 per share	13,500,000	8.500	0.325	110,362,500
	Investment banker's Profit if the Share sold @$8.50 per Share	13,500,000	0.325	-	4,387,500