Stephens Start-ups, Inc. is selling 3 million shares in an IPO. The target price is $25 per share. The investment bank is asking for a spread of 7%. We would prefer the spread to be lower, but fear that the investment bank will then want a lower offer price to reduce their risk.

How much money will the firm receive if the offer price is $25 per share and the spread is 7%?

If you insist on a 5% spread, then what is the lowest price per share you are willing to accept before you would have preferred a 7% spread and $25 per share price?