A firm has negotiated a seasoned equity offer that will provide the firm with $1.68 million in net proceeds.The underwriting spread is 7.35 percent and the firm needs to sell 50,000 shares.What is the offer price?

Question

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First, we need to calculate the total underwriting fee:
Underwriting fee = net proceeds / (1 - underwriting spread%) = $1.68 million / (1 - 7.35%) = $1.813 million

Next, we can calculate the total offering size:
Total size = net proceeds + underwriting fee = $1.68 million + $1.813 million = $3.493 million

Finally, we can calculate the offer price per share:
Offer price per share = total size / number of shares = $3.493 million / 50,000 shares = $69.86
However, this is the price before the underwriting spread is added. To account for the spread, we can use the following formula:
Offer price per share = (total size / number of shares) / (1 - underwriting spread%) = $69.86 / (1 - 7.35%) = $36.27

Therefore, the answer is C.

A Firm Has Negotiated a Seasoned Equity Offer That Will