Braynerd Chemicals sells 40 million shares of stock in an SEO 35 million being primary shares issued by the company and 5 million being secondary shares sold by investors in the company.At the time of the sale,Braynerd's stock was selling at $22.50 per share.If the underwriter charges 6% of the gross proceeds as a fee,how much money was raised in the sale?

Question

Quizplus · Accepted Answer

The number of primary shares issued by the company is 35 million. The total value of these shares at the time of sale is calculated as:

35 million shares x $22.50 per share = $787.5 million

The number of secondary shares sold by investors in the company is 5 million. The total value of these shares at the time of sale is:

5 million shares x $22.50 per share = $112.5 million

So the total gross proceeds from the sale are:

$787.5 million + $112.5 million = $900 million

The underwriter charges 6% of the gross proceeds as a fee, so the amount raised in the sale after subtracting the underwriter's fee is:

$900 million - (0.06 x $900 million) = $846 million

Therefore, the correct answer is C.

Braynerd Chemicals Sells 40 Million Shares of Stock in an SEO