Laura's Design Is About to Go Public

question 6

Multiple Choice

Laura's Design is about to go public.Its present shareholders own 800,000 shares.The new public issue will represent 1,200,000 shares.The shares will be priced at $30 to the public with a 5% spread.The out-of pocket costs will be $700,000.What are the net proceeds to the firm?

• A) $34,200,000
• B) $36,000,000
• C) $33,500,000
• D) $11,400,000

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Definitions:

Shares

Portions of ownership in a company or finance asset, ensuring equitable division of profits through dividends, whenever they are declared.

No-Par Common Stock

Common stock issued without a par value, where the board of directors decides the selling price.

Stated Value

A value assigned to a security or asset which is not determined by market forces.

Shares

Ownership segments in a corporation or financial asset, allowing for an equal share in declared profits, distributed as dividends.