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"Pawprints Paint recently went public in a best efforts offering. The company offered 160,000 shares of stock for sale at an offer price of $26 per share. The administrative costs associated with the offering were $400,000 and the underwriter's spread was 8 percent. After completing their sales efforts, the underwriters determined that they sold a total of 153,700 shares. What were the net proceeds to the company

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Kolawole845

Answer:

Net proceeds           $3,356,808

Explanation:

The net proceeds to the company would be the gross proceeds from the issue less the underwriting costs and the administrative cost

                                                                                        $

Gross proceeds (153,700 × $26)                          3,996,200  

Underwriting spread( 8%× 3,996,200)                  (319,696)

Administrative  cost                                               ( 400,000)

Net proceeds                                                           3,356,808

         

                                         

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