Saskatoon Smelting sells 25 million shares of stock in an SEO,with 20 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 $4.75 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 number of shares sold is 25 million, out of which 20 million are primary shares and 5 million are secondary shares.
The total value of the primary shares sold = 20 million x $4.75 = $95 million
The total value of the secondary shares sold = 5 million x $4.75 = $23.75 million
Therefore, the total value of shares sold = $95 million + $23.75 million = $118.75 million
The underwriter charges a fee of 7% of the gross proceeds, which is 7% of $118.75 million = $8.31 million
Hence, the net amount raised in the sale is $118.75 million - $8.31 million = $110.44 million. 
Therefore, the correct answer is option C.

Saskatoon Smelting Sells 25 Million Shares of Stock in an SEO,with