Skiffertons , an investment banking firm bas proposed two types of payment plans

Question

Skiffertons , an investment banking firm bas proposed two types of payment plans for the IPO being considered by Dakota Drilling, a manufacturer of oil drilling equipment. The first is a firm commitment of E5,000,OOO. The second is a best effort in which Skiffertons will receive E4.00 for every share sold up to a maximum ofE2,OOO,000 for the 500,000 shares being offered. How much money will SkifIertons earn under the best efforts method if it is able to sell only 80% ofthe offering at a price ofE30.00 per share?

Explanation / Answer

SkifIertons earn under the best efforts method = E4.00 * 80%*offered share upto E2,OOO,000

SkifIertons earn under the best efforts method = E4.00 * 80%*500000 upto E2,OOO,000

SkifIertons earn under the best efforts method = E 1,600,000

Answer

SkifIertons earn under the best efforts method = E 1,600,000

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