Respuesta :
Answer:
The net proceeds is $ 3,679,800.00
Explanation:
The net proceeds is the total proceeds less spread of 8% on the total proceeds as well as the administrative costs of $865,000
Total proceeds ($38*130,000) $ 4,940,000.00
Less 8% underwriter's spread
(8%* 4,940,000.00) ($395,200.00)
Administrative costs ($865,000.00)
Net proceeds from the issue $3,679,800.00
Ultimately, the net proceeds from the issue assuming it is completely sold out is $3,679,800.00
The spread of 8% is necessary as paying it gives complete assurance that the underwriters would ensure all shares are sold in order to raise the required amount.
