Net proceeds assuming the issue is completely sold

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Reference no: EM132069547

1. Global Traders is offering 130,000 shares of stock to the public in a general cash offer. The offer price is $38 a share and the underwriter's spread is 8 percent. The administrative costs are estimated at $865,000. How much will Global Traders receive from this stock offering as net proceeds assuming the issue is completely sold?

$3,370,800

$3,679,800

$4,490,000

$4,075,000

$3,828,400

2. Deep Hollow Oil issued 135,000 shares of stock last week. The underwriters charged a spread of 8.05 percent in exchange for agreeing to a firm commitment. The legal and accounting fees amounted to $418,000 and the company incurred $48,000 in indirect costs. The offer price was $33 a share. Within the first hour of trading, the stock price increased to $36 a share. What was the flotation cost as a percentage of the funds raised?

28.89 percent

33.03 percent

26.47 percent

20.55 percent

33.87 percent

Reference no: EM132069547

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