Investment Bankers Association (IBA) has an agreement with Northern Airlines to underwrite an equity issue with a market value equal to $11 million.

a) If IBA's underwriting fee is 5 percent and its out-of-pocket expenses associated with the issue are $125,000, what is the net amount hat IBA will receive under its agreement with Northern?

b) Assuming that the information in part a does not change and Northern incurs out-of-pocket expenses equal to $240,000 for items such as printing, legal fees, and so on, what will be the net proceeds from the equity issue for Northern?