Use the information below to answer the following two questions

GNK Inc sold 3 million shares in its IPO, at a price of $21.5 per share. Management negotiated an underwriting spread of 5% on this transaction. The share price rises to $24 in the secondary market on the first trading day.

What was the dollar cost of the underwriting fee?

a)$4,700,000

b)$3,225,000

c)$5,040,000

d)$3,600,000

e)$4,515,000

What is the cost to GNK Inc. due to underpricing?

a)$6m

b)$6.5m

c)$7.1m

d)$7.5m

e)$7m