10)

The Wrigley Corporation needs to raise $24 million. The investment banking firm of Tinkers, Evers, & Chance will handle the transaction.

a.

If stock is utilized, 2,100,000 shares will be sold to the public at $12.25 per share. The corporation will receive a net price of $11.50 per share. What is the percentage underwriting spread per share?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Underwriting spread per share

%

b.

If bonds are utilized, slightly over 24,150 bonds will be sold to the public at $1,003 per bond. The corporation will receive a net price of $998 per bond. What is the percentage of underwriting spread per bond? (Relate the dollar spread to the public price.)(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Underwriting spread per bond

%

c-1.	Which alternative has the larger percentage of spread?
	Stock Bond

c-2.	Is this the normal relationship between the two types of issues?
	Yes No