Your firm is selling

4

million shares in an IPO. You are targeting an offer price of

$16.76

per share. Your underwriters have proposed a spread of

6.9%,

but you would like to lower it to

5.9%.

However, you are concerned that if you do so, they will argue for a lower offer price. Given the potential savings from a lowerspread, how much lower can the offer price go before you would have preferred to pay

6.9%

to get

$16.76

pershare?