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An investment bank agrees to underwrite an issue of 1 8 million shares of stock for Looney Landscaping Corporation. a . The investment bank underwrites

An investment bank agrees to underwrite an issue of 18 million shares of stock for Looney Landscaping Corporation.
a. The investment bank underwrites the stock on a firm commitment basis, and agrees to pay $10.00 per share to Looney Landscaping
Corporation for the 18 million shares of stock. The investment bank then sells those shares to the public for $11.25 per share. How
much money does Looney Landscaping Corporation receive? What is the profit to the investment bank? If the investment bank can sell
the shares for only $8.25, how much money does Looney Landscaping Corporation receive? What is the profit to the investment bank?
b. Suppose, instead, that the investment bank agrees to underwrite the 18 million shares on a best efforts basis. The investment bank
is able to sell 16.5 million shares for $10.00 per share, and it charges Looney Landscaping Corporation $0.325 per share sold. How
much money does Looney Landscaping Corporation receive? What is the profit to the investment bank? If the investment bank can sell
the shares for only $8.25, how much money does Looney Landscaping Corporation receive? What is the profit to the investment bank?
(For all requirements, enter your answers in dollars, not in millions. Negative amounts should be indicated by a minus sign.)
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