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Howett Pockett, Inc., plans to issue 10.1 million new shares of its stock. In discussions with...

Howett Pockett, Inc., plans to issue 10.1 million new shares of its stock. In discussions with its investment bank, Howett Pocket learns that the bankers recommend a net proceed of $34.00 per share and they will charge an underwriter’s spread of 6.0 percent of the gross proceeds. In addition, Howett Pockett must pay $3.5 million in legal and other administrative expenses for the seasoned stock offering.

Calculate the gross proceeds per share. (Round your answer to 2 decimal places.)
  Gross proceeds $  per share  

Calculate the total funds received by Howett Pockett from the sale of the 10.1 million shares of stock.(Enter your answer in millions of dollars rounded to 3 decimal places.)
  Funds received by Howett Pockett $  m  

Solutions

Expert Solution

No of shares           10,100,000
Net proceed                          34
Underwriter commission 6%
Net proceeds 10100000*34
Net proceeds         343,400,000
Underwriter commission 6%
Gross proceeds 343400000/94%
Gross proceeds     365,319,148.9
Gross proceeds per share 365319148/10100000
Gross proceeds per share                     36.17
Net proceed         343,400,000
Legal expense             3,500,000
Funds received by HP         339,900,000

jeff jeffy answered 3 years ago
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