Question

Assume Sybase Software is thinking about three different size offerings for issuance of additional shares.

Size of Offer				Public Price				Net to Corporation
a.	$	1.3	million		$	45			$	41.60
b.		11.0	million			45				42.48
c.		32.0	million			45				43.50

What is the percentage underwriting spread for each size offer? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
  

Size of the offer Underwriting Spread

a. $ 1.3 million _________________

b. $ 11 million _________________

$ 32 million _________________

Answer 1

Issue size	Underwriter spread in %
1.3 million	7.56%
11 million	5.60%
32 million	3.33%

Working:

Issue size	Public price	Number of shares	Net to corporation per share	Net to corporation in value	Underwriter spread	Underwriter spread in %
I	P	N = I/P	C	V = N x C	S = I-V	S% = S/I
1,300,000	45	28888.89	41.60	1,201,777.78	98,222.22	7.56%
11,000,000	45	244444.44	42.48	10,384,000.00	616,000.00	5.60%
32,000,000	45	711111.11	43.50	30,933,333.33	1,066,666.67	3.33%