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An investment bank agrees to underwrite an issue of 14 million shares of stock for Looney Landscaping Corporation. a. The investment bank underwrites the stock

image text in transcribed An investment bank agrees to underwrite an issue of 14 million shares of stock for Looney Landscaping Corporation. a. The investment bank underwrites the stock on a firm commitment basis, and agrees to pay $12.50 per share to Looney Landscaping Corporation for the 14 million shares of stock. The investment bank then sells those shares to the public for $13.75 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 $10.50, 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 14 million shares on a best efforts basis. The investment bank is able to sell 9.7 million shares for $12.50 per share, and it charges Looney Landscaping Corporation $0.200 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 $10.50, 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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