Calculating Costs of Issuing Stock Saddles and Bridles,Inc

question 77

Multiple Choice

Calculating Costs of Issuing Stock Saddles and Bridles,Inc.,with the help of its investment bank recently issued 3 million shares of new stock.The offer price on the stock was $23.50 per share and Saddles and Bridles received a total of $68.385 million from the stock offering.Calculate the net proceeds and the underwriter's spread charged by the underwriter to Saddles and Bridles.What percentage of the gross proceeds is the investment bank charging Saddles and Bridles for underwriting the stock issue?

• A)3 percent
• B)6 percent
• C)9 percent
• D)97 percent