The Fitness Studio, Inc., with the help of its investment bank, recently issued

Question

The Fitness Studio, Inc., with the help of its investment bank, recently issued 2.8 million shares of new stock. The offer price on the stock was $25.50 per share and The Fitness Studio received a total of $67,830,000 through this stock offering.

Calculate the net proceeds per share and the underwriter's spread per share on the stock offering. (Round your answers to 3 decimal places.)

Net Proceeds Per Share $ ____________

Underwriter's Spread Per Share $ ____________

What percentage of the gross price is the investment bank charging The Fitness Studio for underwriting the stock issue?

Percent Underwriting Spread ____________%

The Fitness Studio, Inc., with the help of its investment bank, recently issued 2.8 million shares of new stock. The offer price on the stock was $25.50 per share and The Fitness Studio received a total of $67,830,000 through this stock offering.

Explanation / Answer

Net Proceeds per Share = Total Procceds received/Number of shares outstanding

Net proceeds per share = 67,830,000/2,800,000 = $24.225 --> Answer

Underwriter's spread per share = Price of offering per share - Net proceeds Paid to company per share

Underwriter's spread per share = $25.50 - $24.225 = $1.275 --> Answer

Percent Underwriting Spread = $1.275/$2.5.50 = 5.000%--> Answer

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