Harper’s Dog Pens, Inc., with the help of its investment bank, recently issued 7

Question

Harper’s Dog Pens, Inc., with the help of its investment bank, recently issued 7.7 million shares of new stock. The offer price on the stock was $11.50 per share and Harper’s received a total of $81.62 million from the stock offering. Calculate the net proceeds per share and the underwriter's spread per share on the stock offering. (Round your answers to 2 decimal places.)

Net proceeds $ per share

Underwriter’s spread $ per share

What percentage of the gross proceeds is the investment bank charging Harper’s Dog Pens for underwriting the stock issue? (Round your answer to 2 decimal places.)

Percent underwriting spread %

Explanation / Answer

Market value of shares = 7,700,000×$11.50 = $88,550,000

Under writers spread per share:

= ($88,550,000-$81,620,000)÷7,700,000

= $0.90 per share

In % form:

= $0.90/$11.50

= 7.83%

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