An investment bank agrees to underwrite an issue of50million shares of stock for Looney Landscaping Corp.

a) The investment bank underwrites the stock on a firm commitment basis, and agrees to pay $25.4per share to Looney landscaping corp. for the 50million shares of stock. The investment bank then sells those shares to the public for $28.6per share. How much money does LooneyLandscaping Corp. receive? What is the profit to the investment bank? If the investment bank can sell the shares for only $22.45, how much money does LooneyLandscapingCorp. receive? What is the profit to the investment bank?

b) Suppose, instead, that the investment bank agrees to underwrite the50million shares on a best efforts basis. The investment bank is able to sell48.5million shares for $25.4per share, and it charges Looney landscaping Corp. $0.275 per share sold. How much money does Looney Landscaping Corp. receive? What is the profit to the investment bank? If the investment bank can sell the shares for only $23.80how much money does LooneyLandscaping Corp.receive? What is the profit to the investment bank?(6 points)