A firm plans to raise $195,000,000 by selling new sharesof common stock through IPO. The offer price will be $92.50 per share. The underwriter will charge a 7.75% spread. Answer the following:

a. What is the gross spread on a per share basis?

b. What price will the issuer receive per share?

c. If the firm must pay $750,000 in direct costs, how many shares will be issued?

d. if the stock closes at $97.85 on the first day of trading, how much will the firm lose per share due to underpricing?

e. what are the total flotation costs?

f. what are the total IPO costs? (direct costs + underpricing + flotation costs)

Equation Gross Spread=Offer price - Price issuer receives