The spread have to be to cover the underwriters costs

Assignment Help Financial Management

Reference no: EM131328354

Norman Internet Service Company (NISC) is interested in selling common stock to raise capital for capacity expansion. The firm has consulted First Tulsa Company, a large underwriting firm, which believes that the stock can be sold for $50 per share.

The underwriter's investigation found that its administrative costs will be 2.5 percent of the sale price, and its selling costs will be 2.0 percent of the sale price.

If the underwriter requires a profit, equal to 1 percent of the sale price, how much, in dollars, will the spread have to be to cover the underwriter's costs and profit?

Reference no: EM131328354

Questions Cloud

Identify ways that agency security policies can be influence : Identify the various ways that agency or organization security policies can be influenced. Compare and contrast the difference between legislation and other regulatory documents, i.e., guidance, standards, directives, executive orders, etc.

Calculate the initial return earned by investors : Calculate the initial return earned by investors who are allocated shares in the IPO.- How much will WCMC receive from this offering?

What net return you earn on your share investment : What net return did you earn on your share investment? Assess this return compared with the overall market return.

Prepare a schedule showing change in revenues and expenses : Prepare a schedule showing the change in revenues and expenses and the impact on the company's overall net operating income that would result if the Location 1 were closed.

The spread have to be to cover the underwriters costs : If the underwriter requires a profit, equal to 1 percent of the sale price, how much, in dollars, will the spread have to be to cover the underwriter's costs and profit?

Firm expects to pay the dividends over the next four years : Firm Z expects to pay the following dividends over the next four years (years 1 through 4): $3, $15, $10, $2. Afterwards, the company will maintain a constant 5% growth rate in dividends forever. If the required return on this stock is 10%, what is i..

How many new shares must the company sell : The company's legal, accounting, and printing expenses, associated with the seasoned offering, are estimated to be $750,000. How many new shares must the company sell to net $50 million?

Determine lajolla securities profit on the offering : Determine LaJolla Securities' profit on the offering if, immediately after the offering began, the secondary market price of each share was given.

International fisher effect-nominal annual interest rates : Nominal annual interest rates in Cyprus are 7.8431%. The spot rate for the Cyprus pound (CYP) is $1.50 and the Cyprus pound is expected to adjust to a future spot rate (one year from today) of $1.53. According to the international Fisher effect (IFE)..

User Account

All Pages