Skiffertons , an investment banking firm has proposed two types of payment plans

Question

Skiffertons , an investment banking firm has proposed two types of payment plans for the IPO being considered by Dakota Drilling, a manufacturer of oil drilling equipment. The first is a firm commitment of $5,000,000. The second is a best effort in which Skiffertons will receive $4.00 for every share sold up to a maximum of $2,000,000 for the 500,000 shares being offered. How much money will BB earn under the best efforts method if it is able to sell only 80% of the offering at a price of $30.00 per share?

A) $2,000,000

B) $1,800,000

C) $1,600,000

D) $1,400,000

Explanation / Answer

C) $1,600,000 ( 500000x.8x4)

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