ON = c. H W 1189/30x12) 195,000 230,406 Tt Bala Principle w Freeform Boxed PLA BAR Intrest = 91,796.59 > by fi the 08.4-91795.8 138612.6 4. A firm desires to sell stock to the public. The underwriter charges $0.45 million in-fees and offers to buy six million shares from the firm at a price of $35 per share. In addition, registration and audit fees total $130,000, and marketing and miscellaneous fees add up to another $75,000. = The underwriter expects to earn gross proceeds per share of $38. a. What is the issuing firm's out-of-pocket dollar transaction cost to issue the stock? it is outside the issue. only transaction costs. (to carry whole issue but not proceeds underwriter 130,000 +75000 for selling the issue) a. out-of-Pocket fees. = 0.45 m 0.45m+ 0.13m +0.075m = 665m 130.000 1,000,000 -0.13 million Registration and audit fees = marketing Shares-6m 75000 1000,000 =0.075 million Price Per Share: 35 gross Proceeds = 38 b. What is the cost of this IPO to the underwriter? 2.7 Million 1845 0.45 on x6ion= 2.7 Million X 35 945 c. What is the total issuance cost for the issuing firm? IPO Cost of Share x Share Ph Total insura outof pocket st gross. Proceeds shares) - S = 0.655 m +(38x6m)" => 228.655m = 6m x 35-210million 322705000 d. Immediately after the stock was issued, the stock price rose to $40. What is the issuing firm's opportunity cost? tock Price rose to 40$ you missed Calulate it! opportunity Cost (Price After issuing -Price at issuing )x Shares SECTION 3: SHORT ANSWERS = (40-35) x6m = 30 million (5 MARKS) INSTRUCTION: Section 3 contains FIVE (5) questions. Answer ALL questions. 1. Define circuit breakers and list their goal. Circuit breakers is when the market is experiencing high increase or low decrease then it will give them a break for couple of minutes to make better decisions. to make better decisions revent another crisis