Parafoil Avionics sells 50 million shares in an SEO - 40 million being primary shares issued by thecompany 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 gross proceeds from the sale are $50 million x $12.50 = $625 million. The underwriter's fee is 5% of $625 million, or $31.25 million. The net proceeds from the sale are $625 million - $31.25 million = $593.75 million.

Parafoil Avionics Sells 50 Million Shares in an SEO -