PLEASE ANSWER THIS QUESTION

A company is going public at $19 and will use the ticker XYZ. The underwriters will charge a 7 percent spread. The company is issuing 16 million shares, and insiders will continue to hold an additional 32 million shares that will not be part of the IPO. The company will also pay $1.5 million of audit fees, $3.5 milion of legal fees, and $900,000 of prititing fees. The stock doses the first day at $23. Now the company grants a 15 percent overallotment option to the underwriter. The underwiter issues shares that are backed by the entire overallotment option but has not yet exercised the option. a. Explain what will happen if the price of the stock increases to $25.00. Describe the underwriter profits from the overallotment option in your explanation. Enter your answer in milliens. For example, an answer of $1.23 million should be entered as 1.23, not 1,230,000. Do not round intermedlate calculations. Round your answer to two decimal places. If the stock price increases to $25.00 in the secondary market, the underwriter exercise its option and the underwriter profit will be 3 b. Explain what will happen if the price of the stock decreases to $15.00. Describe the underwriter profits from the overallotment option in your explanation. Enter your answer in malions. For example, an answer of $1.23 million should be entered as 1.23, not 1,230,000. Do not round intermediate calculations. Round your arswer to two decimal places. If the stock price decreases to $15,00 in the secondary market, the underwriter exercise its option and the underwiter proft will be 3 mithion