Calculating Costs of Issuing Stock Turbo Technology Corp

question 68

Multiple Choice

Calculating Costs of Issuing Stock Turbo Technology Corp.recently went public with an initial public offering of 3 million shares of stock.The underwriter used a firm commitment offering in which the net proceeds was $7.50 per share and the underwriter's spread was 9 percent of the gross proceeds.Turbo Technology also paid legal and other administrative costs of $200,000 for the IPO.Calculate the gross proceeds per share received by Turbo Technology from the sale of the 3 million shares of stock.

• A)$7.50
• B)$7.57
• C)$8.24
• D)$8.32

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Definitions:

GDP Deflator

A measure of the level of prices of all new, domestically produced, final goods and services in an economy, used to convert nominal GDP into real GDP.

Consumer Price Index

A benchmark capturing the average movement over time in the outlay of urban buyers for a predetermined mix of consumer goods and services.

Consumer Price Index

An index measuring the change over time in the price level of consumer goods and services purchased by households.

Base Year

A reference point in time used for comparative purposes, particularly in the context of economic and financial indices.