Firm commitment versus best efferts. Astro Investment Bank offers Lunar Vacations the following options on its initial public sale of equity: (a) a best efforts arrangement whereby Astro will keep 2.8% of the retail sales or (b) a firm commitment arrangement of $9,500,000. Lunar plans on offering shares at $12.05 per share to the public.

a. What is the break-even point in number of shares for Lunar Vacations?

b. What are the proceeds to Lunar Vacations at the break-even point?

c. What are the proceeds to Astro Investment Bank at the break-even point?