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 $390,000. What profit or loss would Security Brokers incur if the issue were sold to the public at the following average price?

1. $5.5 per share? Use minus sign to enter loss, if any. $
2. $6.25 per share? Use minus sign to enter loss, if any. $
3. $4 per share? Use minus sign to enter loss, if any. $