Parafoil Avionics sells 50 million shares in an SEO - 40 million being primary shares issued by the company and 10 million being secondary shares sold by investors in the company. At the time of the sale, Parafoil's shares were selling at $12.50 per share. If the underwriter charges 5% 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 50 million shares at $12.50 per share is $625 million. The underwriter's fee is 5% of $625 million, which is $31.25 million. Therefore, the net amount raised is $625 million - $31.25 million = $593.75 million. However, since the question asks for the gross amount raised before the underwriter's fee, the correct answer is $625 million, but due to the instruction for only the choice number, the closest correct choice given the context is $475 million, which seems to be a misunderstanding in the calculation or presentation of options.

Parafoil Avionics Sells 50 Million Shares in an SEO -