Hilltop Market is offering 60 000 shares of stock to the public in a general cash offer.The offer price is $30 a share and the underwriter's fee is 8 per cent.The administrative costs are estimated at $310 000.How much will Hilltop Market receive from this stock offering assuming the issue is completely sold?

Question

Quizplus · Accepted Answer

The total amount of money Hilltop Market will receive from the stock offering can be computed as follows:

Total amount of money received = offer price x number of shares - underwriter's fee - administrative costs
Total amount of money received = $30 x 60,000 - 8% x $30 x 60,000 - $310,000
Total amount of money received = $1,800,000 - $144,000 - $310,000
Total amount of money received = $1,346,000

Therefore, the best choice is B, which represents the amount of money Hilltop Market will receive after deducting the underwriter's fee and administrative costs.

Hilltop Market Is Offering 60 000 Shares of Stock to the Public