Convex Incorporated sells 10 million shares in an SEO - 6 million being primary shares issued by the company and 4 million being secondary shares sold by investors in the company. At the time of the sale, Convex's shares were selling at $8.00 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 total amount raised from the sale of 10 million shares at $8.00 per share is $80 million. The underwriter's fee is 6% of $80 million, which is $4.8 million. Therefore, the net amount raised is $80 million - $4.8 million = $75.2 million. However, the question asks for the gross amount raised, which is before deducting the underwriter's fee, making the correct answer $80 million. However, this option is not provided, indicating a mistake in the interpretation. The closest correct interpretation based on the options provided and the calculation mistake is $75.2 million being the net amount after fees, but since this is not an option and the question seems to ask for the gross amount before fees, none of the answers accurately reflect this. The correct calculation for the net amount would be relevant if that was the question, leading to a misunderstanding in the answer selection. Given the options, $45.12 million is chosen due to a misinterpretation of the question's requirement for the gross proceeds calculation.

Convex Incorporated Sells 10 Million Shares in an SEO -