Parafoil Avionics Sells 50 Million Shares of Stock in an SEO

question 101

Multiple Choice

Parafoil Avionics sells 50 million shares of stock in an SEO - 40 million being primary shares issued by the company and 10 million being secondary shares sold by investors in the company.At the time of the sale,Parafoil's stock was selling at $12.50 per share.If the underwriter charges 5% of the gross proceeds as a fee,how much money did existing investors in the company net from the sale?

• A)$118.75 million
• B)$125 million
• C)$475 million
• D)$500 million

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Definitions:

Value-Based Pricing

Setting the price of a product or service based on the perceived value it offers to customers rather than its cost of production.

Operating Cost

Expenses associated with the day-to-day functions of a business, excluding the cost of goods sold (COGS).

Useful Life

The estimated duration of time that an asset is expected to be usable for its intended purpose.

Target Costing

A pricing strategy in which a company determines the potential selling price of a product before designing it and then subtracts a desired profit margin to arrive at a target cost.