E connect Chapter 16 Homework Question 4 (of 4) 25.00 points XYZ, Inc., has issu

Question

E connect Chapter 16 Homework Question 4 (of 4) 25.00 points XYZ, Inc., has issued 10 million new shares of stock. An investment bank agreos to underwrite these shares on a best efforts basis. The investment bank is able to sell 8.5 million shares for $24 per share, and it chargos XYZ $0.720 per share sold a How much monay does XYZ reoeive after commission? (Entor your answer in dollars not in millions Do not round intermediate calculations.) b. What is the profit to the investment bank? (Enter your answer in dollars not in millions. Do not round intermediate caloulations) Proft to the investment bank What is the stock price of XYZ? c. Stock price of XYZ References eBook &Resources; Worksheet Difficulty: Medium Ask your instructor a question Check my work 6.037 MacBook Air o0 F2 F3

Explanation / Answer

a.

Number of share issued = 8.50 million.

Offer Price = $24

Underwriter charge = $0.72 per Share.

So net procced receive by company per share = ($24.00 - $0.72)

= $23.28.

Net procced receive by company per share is $23.28.

So total proceed receive by XYZ = 8.50 million × $23.28.

= $197.88 million.

Total proceed receive by XYZ is $197.88 million.

b.

Profit for investment bank per share is $0.72.

Total profit to Investment Bank = 8.50 million × $0.72

= $6.12 million.

Total Profit to Investment bank is $6.12 million.

c.

Share price of XYZ = $24 - $0.72

= $23.28

Share price of XYZ is $23.28.

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