Harper’s Dog Pens, Inc., with the help of its investment bank, recently issued 8

Question

Harper’s Dog Pens, Inc., with the help of its investment bank, recently issued 8.4 million shares of new stock. The offer price on the stock was $11.60 per share and Harper’s received a total of $89.04 million from the stock offering.

Calculate the net proceeds per share and the underwriter's spread per share on the stock offering. (Round your answers to 2 decimal places.)

What percentage of the gross proceeds is the investment bank charging Harper’s Dog Pens for underwriting the stock issue? (Round your answer to 2 decimal places.)

Harper’s Dog Pens, Inc., with the help of its investment bank, recently issued 8.4 million shares of new stock. The offer price on the stock was $11.60 per share and Harper’s received a total of $89.04 million from the stock offering.

Explanation / Answer

Total issue = no fo shares* issue price

=8.4 million shares * 11.6$

= $97.44 million

Total receipt of fund = 89.04 million

Thus Net proceed per share = 89.04/8.4

=10.6$

Thus underwriter's commission = 97.44-89.04 = $ 8.4 million

underwriter's spread per share = 8.4/8.4

=1$

% of underwriter's commission = 8.4/97.44

=8.6207%

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