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 $43.245 million of new debt. The offer price (and face value) on the debt was $1,000 per bond and the underwriter’s spread was 5 percent of the gross proceeds.

Calculate the amount of capital funding The Fitness Studio raised through this debt offering. (Enter your answer in dollars not in millions.)

Funds Recieved:

The Fitness Studio, Inc., with the help of its investment bank, recently issued $43.245 million of new debt. The offer price (and face value) on the debt was $1,000 per bond and the underwriter’s spread was 5 percent of the gross proceeds.

Explanation / Answer

New Debt Raised=$43.245 Million=43.245 x 1000000=$43245000

Underwriter will get, 43245000 x .05=$2162250

Funds Recieved=$43245000-$2162250=41082750

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