Calculating Costs of Issuing Stock TV Technology Corp

question 21

Multiple Choice

Calculating Costs of Issuing Stock TV Technology Corp. recently went public with an initial public offering of 1.5 million shares of stock. The underwriter used a firm commitment offering in which the net proceeds was $24.50 per share and the underwriter's spread was 5 percent of the gross proceeds. TV also paid legal and other administrative costs of $300,000 for the IPO. Calculate the gross proceeds per share received by TV from the sale of the 3 million shares of stock.

• A) $24.50
• B) $24.70
• C) $25.79
• D) $26.00

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Definitions:

Indebtedness

The condition of owing money, often as a result of borrowing for business or personal needs.

Legal Document

A document that states some contractual relationship or grants some right, serving as official evidence of an agreement.

Business Transaction

An economic event or activity that changes an entity's financial statements, involving the exchange of goods, services, or funds between two or more parties.

Shortage Cost

Costs incurred from not having enough inventory or resources to meet demand, leading to potential lost sales.