Ajax Corporation Has Received a Firm Commitment from Its Underwriter

question 92

Essay

Ajax Corporation has received a firm commitment from its underwriter to purchase 1 million shares of stock that will be marketed to the general public at $23 per share.The underwriter's spread is $1.90 per share and the issuing firm will pay an additional $1.65 million in legal and other fees.The issue was fully sold on the first day and the stock closed at $27.50 on that day.Calculate both the direct expense of issuance and the indirect (i.e.,underpricing)expense.What percentage of the market value of the shares is represented by these costs?

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Definitions:

Concordat

An agreement between the Vatican and a secular government regarding the regulation of church affairs.

Catholic Church

The Catholic Church is a major religious institution centered on the teachings of Christianity, with the Pope as its spiritual leader, and has a significant influence on global culture, politics, and history.

Administrative Department

A division within an organization or government responsible for implementing policies, overseeing operations, and managing personnel.

Ecclesiastical Reforms

Changes and improvements made to the organization, doctrine, or practice of the Christian Church, often aimed at addressing corruption and enhancing the spiritual integrity of the institution.