Game Guys, Inc., needs several million dollars to expand and follow its strategic plan. In negotiations with the investment banker, they agree to issue 50 million shares of common stock, at $25/share. If the investment banker's fee for underwriting the total sale is 5.82%, what is the discounted price that the investment bank is willing to pay Game Guys for the shares?

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If the investment banker sells the entire issue, he will bring in revenue of $1.25 billion (50,000,000 shares x $25/per share). The banker will take [$1,250,000,000 x .0582 = $72,750,000], a total of $72,750,000 for their services, leaving Game Guys approximately $1,177,250,000 for their expansion project.