Waterloo Waste Management sells 5 million shares of stock in an SEO,with 3 million being primary shares issued by the company and 2 million being secondary shares sold by investors in the company.At the time of the sale,the firm's stock was selling at $12.50 per share.If the underwriter charges 7% of the gross proceeds as a fee,how much money was raised in the sale?

Question

Quizplus · Accepted Answer

The total amount raised from the sale of 5 million shares at $12.50 per share is $62.5 million. The underwriter's fee is 7% of $62.5 million, which is $4.375 million. Therefore, the net amount raised is $62.5 million - $4.375 million = $58.125 million. However, since the question asks for the gross amount raised, the correct answer is the total amount before the underwriter's fee, which is $62.5 million. However, this option is not provided, indicating a possible mistake in the question or the answer choices. Based on the closest available option, $58.13 million (B) would be the net amount after fees, not the gross amount raised. The correct calculation method was described, but the exact match for the calculated gross proceeds is not listed in the provided options.

Waterloo Waste Management Sells 5 Million Shares of Stock in an SEO,with