32. 2.00 points MC Qu. 234 Idle Time Gaming, Inc., has reached the poin.. Idle T

Question

32. 2.00 points MC Qu. 234 Idle Time Gaming, Inc., has reached the poin.. Idle Time Gaming, Inc., has reached the point where it needs several million dollars in order to expand and follow its strategic plan. In negotiations with the investment banker, they agree to issue 40 million shares of common stock, at $22/share. If the investment banker's fee for underwriting the total sale is 6.82%, what is the discounted price that the investment bank is willing to pay ldle Time for the shares? Approximately $300,000,000 O Approximately $820,000,000 Approximately $880,000,000 Approximately $88,000 O Approximately $88,000

Explanation / Answer

Revenue generated from sale of 40 million shares @ $22/share:

40,000,000 x $22 = $880,000,000

Banker’s fee @ 6.82% = 880,000,000 x 0.0682 = $60,016,000

Idle time investment bank willing to pay = $880,000,000 - $60,016,000

Idle time bank is willing to pay = $819,984,000

** Approximately $820,000,000.

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