Calculating Costs of Issuing Stock Sandal Etc

question 111

Multiple Choice

Calculating Costs of Issuing Stock Sandal Etc.,Inc.,needs to raise $49 million to finance firm expansion.In discussions with its investment bank,Sandals learns that the bankers recommend an offer price of $25 per share and that 2 million shares of stock be sold.If the net proceeds on the stock sale leaves Sandal with $49 million,calculate the underwriter's spread on the stock issue.

• A)$0.50
• B)$1.00
• C)$2.90
• D)$2.00

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