Young Corporation stock currently sells for $32 per share. There are one million shares currently outstanding. The company announces plans to raise $5 million by offering shares to the public at a price of $32 per share. a. If the underwriting spread is 5%, how many shares will the company need to issue in order to be left with net proceeds of $5 million? (Round your answer to the nearest whole.) Number of shares b. If other administrative costs are $61,000, what is the dollar value of the total direct costs of the issue? (Round your answer to the nearest dollar.) Dollar value of total direct costs $ c. If the share price falls by 3% at the announcement of the plans to proceed with a seasoned offering, what is the dollar cost of the announcement effect? (Round your answer to the nearest dollar.) Dollar value of total direct costs $ Young Corporation stock currently sells for $32 per share. There are one million shares currently outstanding. The companyannounces plans to raise $5 million by offering shares to the public at a price of $32 per share.a. If the underwriting spread is 5%, how many shares will the company need to issue in order to be left with net proceeds of $5million? (Round your answer to the nearest whole.)Number of sharesb. If other administrative costs are $61,000, what is the dollar value of the total direct costs of the issue? (Round your answer to thenearest dollar.)Dollar value of total direct costsc. If the share price falls by 3% at the announcement of the plans to proceed with a seasoned offering, what is the dollar cost of theannouncement effect? (Round your answer to the nearest dollar.)Dollar value of total direct costs

Offer price = P = $ 32 / share; Underwriting spread = S = 5%; Funds to be raised, F = $ 5 million =…

Answered: a. If the underwriting spread is 5%,…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter18: Initial Public Offerings, Investment Banking, And Capital Formation

Section: Chapter Questions

Problem 9MC

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Young Corporation stock currently sells for $32 per share. There are one million shares currently outstanding. The company announces plans to raise $5 million by offering shares to the public at a price of $32 per share. a. If the underwriting spread is 5%, how many shares will the company need to issue in order to be left with net proceeds of $5 million? (Round your answer to the nearest whole.) Number of shares b. If other administrative costs are $61,000, what is the dollar value of the total direct costs of the issue? (Round your answer to the nearest dollar.) Dollar value of total direct costs $ c. If the share price falls by 3% at the announcement of the plans to proceed with a seasoned offering, what is the dollar cost of the announcement effect? (Round your answer to the nearest dollar.) Dollar value of total direct costs $

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