Use the Following Information to Answer the Question(s) Below

question 28

Multiple Choice

Use the following information to answer the question(s) below.
Wyatt Oil has 8 million shares outstanding and is about to issue 10 million new shares in an IPO. The IPO price has been set at $15 per share, and the underwriting spread is 6%. The IPO is a big success with investors, and the share price rises to $35 the first day of trading.
-The total cost to the firm's original investors due to the market imperfections from the IPO is closest to:

• A) $141 million
• B) $210 million
• C) $280 million
• D) $489 million
• E) $630 million