Calculating Costs of Issuing Stock Computer Technology Corp

question 20

Multiple Choice

Calculating Costs of Issuing Stock Computer Technology Corp. recently went public with an initial public offering of 7 million shares of stock. The underwriter used a firm commitment offering in which the net proceeds was $8.35 per share and the underwriter's spread was 7 percent of the gross proceeds. Computer also paid legal and other administrative costs of $300,000 for the IPO. Calculate the gross proceeds per share received by Computer from the sale of the 7 million shares of stock.

• A) $8.35
• B) $8.39
• C) $8.98
• D) $9.02

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Definitions:

Fair Market Value

The price at which an asset would sell in a competitive auction setting, reflecting the value agreed upon by a willing buyer and seller.

Restatement of Contracts

A collection of legal principles regarding contracts, intended to clarify and synthesize current contractual laws in the United States.

Mental Impairment

A condition that impacts an individual's cognitive functioning, potentially affecting memory, decision-making, or learning abilities.

Divisible Agreement

A contract that can be legally separated into individual obligations, allowing for partial fulfillment.