XYZ Inc. would like to issue 80,000 shares through an IPO. The underwriter offers XYZ the option to choose between a firm commitment and best-effort underwriting. 21. Under a firm commitment, the underwriter would buy all of the 80,000 shares issued by XYZ for $25 per share. How much net proceeds would XYZ receive if its stock sells for $30 on the open market and only 90% of the IPO is sold?

A) 1,800,000 B) 2,000,000 C) 2,160,000 D) 2,400,000

Now suppose instead of a firm commitment, XYZ chooses the best-effort deal, where the underwriter receives a fee of $3 per share sold. How much net proceeds would XYZ receive if its stock sells for $30 on the open market and only 90% of the IPO is sold? A) $1,920,000 B) $1,944,000 C) $2,160,000 D) $2,184,000 E) None of the above.