XYZ has received a firm commitment from its underwriter to purchase 1.5 million shares of stock...

XYZ has received a firm commitment from its underwriter to purchase 1.5 million shares of stock that will be marketed to the general public at $60 per share. The underwriter's spread is $3.00 per share and the issuing firm will pay an additional $2million in legal and other fees. The issue was fully sold on the first day and the stock closed at $80.00 on that day. Calculate both the direct expense of issuance and the indirect (i.e., underpricing) expense. What percentage of the market value of the shares is represented by these costs?

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jeff jeffy answered 1 year ago

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