Calculating Costs of Issuing Stock Video Games,Inc

question 117

Multiple Choice

Calculating Costs of Issuing Stock Video Games,Inc.,with the help of its investment bank recently issued 10 million shares of new stock.The offer price on the stock was $47.50 per share and Video Games received a total of $446,500,000 through this stock offering.Calculate the net proceeds and the underwriter's spread on the stock offering.What percentage of the gross price is the investment bank charging Video Games for underwriting the stock issue?

• A)3 percent
• B)30 percent
• C)6 percent
• D)9 percent

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