Calculating Costs of Issuing Stock Mick E Inc

question 108

Multiple Choice

Calculating Costs of Issuing Stock Mick E Inc.plans to issue 25 million new shares of its stock.In discussions with its investment bank,Mick E learns that the bankers recommend a net proceed of $29.80 per share and they will charge an underwriter's spread of 8.5 percent of the gross proceeds.In addition,Mick E must pay $3 million in legal and other administrative expenses for the seasoned stock offering.Calculate the gross proceeds per share received by Mick E from the sale of the 25 million shares of stock.

• A)$29.80
• B)$32.45
• C)$32.57
• D)$32.70

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Definitions:

Adhesion Contract

A standard-form contract prepared by one party, usually favoring that party, to which the other party has little negotiation power and often must accept as is.

Outward Manifestation

Outward manifestation refers to the external display or expression of a condition, intention, or agreement, observable by others.

Reasonable Amount

an amount or quantity that is considered fair, appropriate, or moderate under the circumstances.

Counteroffer

A response to an offer in a negotiation, where the original offer is rejected and a new offer is presented.