Hilltop Market is offering 60,000 shares of stock to the public in a general cash offer. The offer price is $30 a share and the underwriter's spread is 8 percent. The administrative costs are estimated at $310,000. How much will Hilltop Market receive from this stock offering assuming the issue is completely sold?

Question

Quizplus · Accepted Answer

Number of shares offered = 60,000
Offer price per share = $30
Total offering amount = 60,000 x $30 = $1,800,000
Underwriter's spread = 8% of $1,800,000 = $144,000
Administrative costs = $310,000
Total expenses = $144,000 + $310,000 = $454,000
Net proceeds to Hilltop Market = $1,800,000 - $454,000 = $1,346,000.

Hilltop Market Is Offering 60,000 Shares of Stock to the Public