Ontario Operating Systems sells 20 million shares of stock in an SEO,with 15 million being primary shares issued by the company and 5 million being secondary shares sold by investors in the company.At the time of the sale,the firm's stock was selling at $34 per share.If the underwriter charges 6% of the gross proceeds as a fee,how much money was raised in the sale?

Question

Quizplus · Accepted Answer

The number of primary shares sold by the company = 15 million
The number of secondary shares sold by investors = 5 million
Total number of shares sold = 20 million

The price of one share = $34

Total gross proceeds = Number of shares x Price per share
= 20 million x $34
= $680 million

6% of gross proceeds charged as underwriter fee = 6/100 x $680 million = $40.8 million

Therefore, the total amount of money raised in the sale = Gross proceeds - Underwriter's fee
= $680 million - $40.8 million
= $639.2 million

Thus, the best choice is B ($479.4 million) which is not the correct answer.

Ontario Operating Systems Sells 20 Million Shares of Stock in an SEO,with