Your Company Needs to Raise $4 Million to Finance Plant

Your company needs to raise $4 million to finance plant expansion. In discussions with its investment bank, you learn that the bankers recommend a gross price of $50 per share and that 90,000 shares of stock be sold. If the net proceeds on the stock sale leaves your company with $4 million, what is the underwriter's spread on the stock issue?

A) $2.78
B) $5.55
C) $44.44
D) $38.89