XYZ, Inc., has issued 13 million new shares of stock. An investment bank agrees
ID: 2801565 • Letter: X
Question
XYZ, Inc., has issued 13 million new shares of stock. An investment bank agrees to underwrite these shares on a best efforts basis. The investment bank is able to sell 10.3 million shares for $29 per share, and it charges XYZ $0.770 per share sold.
How much money does XYZ receive after commission? (Enter your answer in dollars not in millions. Do not round intermediate calculations.)
What is the profit to the investment bank? (Enter your answer in dollars not in millions. Do not round intermediate calculations.)
What is the stock price of XYZ?
a.How much money does XYZ receive after commission? (Enter your answer in dollars not in millions. Do not round intermediate calculations.)
Explanation / Answer
a Money received after commission Number of shares*(Sale price-Commission per share) $ 290,769,000 10300000*(29-0.77) b Profit to the investment bank Number of shares*Commission per share $ 7,931,000 10300000*0.77 c Stock price of XYZ Sale price $ 29
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