Question
Problem 18-01 Profit or Loss on New Stock Issue Security Brokers Inc. specializes in underwriting new issues by small firms. On a recent offering of
Problem 18-01 Profit or Loss on New Stock Issue
Security Brokers Inc. specializes in underwriting new issues by small firms. On a recent offering of Beedles Inc., the terms were as follows:
| Price to public: | $5 per share |
| Number of shares: | 3 million |
| Proceeds to Beedles: | $14,000,000 |
The out-of-pocket expenses incurred by Security Brokers in the design and distribution of the issue were $220,000. What profit or loss would Security Brokers incur if the issue were sold to the public at the following average price?
Hint: Keep all decimal points when calculating
A. $5.5 per share? Use minus sign to enter loss, if any. $ ________
B. $7 per share? Use minus sign to enter loss, if any. $ ________
C. $3.5 per share? Use minus sign to enter loss, if any.
$_______
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