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Accounting

Problem:

A firm is making an initial public offering. The investment bankers agree to a firm underwriting commitment of 500,000 shares priced to the public at $50 a share. The underwriter's spread is 12%. In addition, the underwriter charges $600,000 in legal fees. On the first day of trading, the firm's stock closed at $61.

Required:

Question: What were the total costs of the issue?

a.) $3,000,000

b.) $9,100,000

c.) $3,600,000

d.) $8,500,000

Note: Provide support for rationale.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91169883

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