DiPitros Paint and Wallpaper, Inc., needs to raise $2.870 million to finance pla
ID: 2707976 • Letter: D
Question
DiPitros Paint and Wallpaper, Inc., needs to raise $2.870 million to finance plant expansion. In discussions with its investment bank, DiPitros learns that the bankers recommend a gross price of $44 per share and that 70,000 shares of stock be sold. The net proceeds on the stock sale leaves DiPitros with $2.870 million.
Calculate the underwriters spread in dollars per share on the stock issue. (Round your answer to 3 decimal places.)
Calculate the underwriters spread in percentage on the stock issue. (Round your answer to 2 decimal places.)
DiPitros Paint and Wallpaper, Inc., needs to raise $2.870 million to finance plant expansion. In discussions with its investment bank, DiPitros learns that the bankers recommend a gross price of $44 per share and that 70,000 shares of stock be sold. The net proceeds on the stock sale leaves DiPitros with $2.870 million.
Explanation / Answer
to get stock proceeds of $2.870 million
with 70000 shares price to be received by company is (2870000/70000) = $41
but share is offered at $44
therefore spred per share = $3
or 7.317%