Winston Sporting Goods is considering a public offering of common stock. Its inv

Question

Winston Sporting Goods is considering a public offering of common stock. Its investment banker has informed the company that the retail price will be $18 per share for 600,000 shares. The company will receive $16.50 per share and will incur $150,000 in registration, accounting, and printing fees.
a.What is the spread on this issue in percentage terms? What are the total expenses of the issue as a percentage of total value (at retail)?
b.If the firm wanted to net $18 million from this issue, how many shares must be sold?

Explanation / Answer

Spread is (18-16.50)/18= 8.33% 150,000(18*600,000)= 1.39% 18,150,000/16.50=1,100,000 shares

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