1.) Suppose a firm is doing an IPO and the investment bank offers to buy the securities for $56.40 per share with an offering price of $60. What is the underwriters spread? Assume that the underwriters cost of bringing the security to the market is $1 per share.

2.) Sheridan Co. needs to borrow $24.25 million for a factory equipment upgrade. Management decides to sell 10-year bonds. They determine that the 3-month Treasury bill yields 4.27 percent, the firms credit rating is AA, and the yield on 10-year Treasury bonds is 1.11 percent higher than that for 3-month bills. Right now, AA bond rates are 1.33 percent above the 10-year Treasury bond rate.