Question

B S digitalcommons.ute... Gwinnett County, G... Week 7 0 - Saved Help Se Problem 18-04 Calculating Costs of Issuing Stock (LG18-4) Don's Captain Morgan, Inc. needs to raise $12.70 million to finance plant expansion in discussions with its investment bank. Don's learns that the bankers recommend an offer price for gross proceeds) of $20.60 per share and Don's will receive $16.75 per share. Calculate the underwriter's spread per share on the issue. (Round your answer to 2 decimal places.) Underwriter's spread per share How many shares of stock wil Don's need to sell in order to receive the $12.70 million it needs (Round your answer to the nearest whole number) Nuber of shares < Pre 7 of 10 Next > here to search DALL

Answer 1

Underwriter spread per share = gross proceeds - net proceeds

Underwriter spread per share = $20.60 - $16.75 = $3.85

Number of shares to sell = amount to raise / net proceeds per share

Number of shares to sell = $12,700,000 / $16.75

Number of shares to sell = 758,209