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In its IPO, 1 million company shares were issued at a price of $25 per share. The underwriter's fee for the offering was 8% of gross proceeds and the issuer incurred direct out-of-pocket costs of $400,000. In the aftermarket on the first day of trading the closing share price was $32. What was the total issue cost as a percent of the issuers proceeds net of all costs?

In its IPO, 1 million company shares were issued at a price of $25 per share. The underwriter's fee for the offering was 8% of gross proceeds and the issuer incurred direct out-of-pocket costs of $400,000. In the aftermarket on the first day of trading the closing share price was $32. What was the total issue cost as a percent of the issuers proceeds net of all costs?

Principles of Accounting Volume 1
Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter14: Corporation Accounting
Section: Chapter Questions
Problem 7EB: Silva Company is authorized to issue 5,000,000 shares of $2 par value common stock. In its IPO, the...
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In its IPO, 1 million company shares were issued at a price of $25 per share. The underwriter's fee for the offering was 8% of gross proceeds and the issuer incurred direct out-of-pocket costs of $400,000. In the aftermarket on the first day of trading the closing share price was $32. What was the total issue cost as a percent of the issuers proceeds net of all costs? Attach Eilo
Transcribed Image Text:In its IPO, 1 million company shares were issued at a price of $25 per share. The underwriter's fee for the offering was 8% of gross proceeds and the issuer incurred direct out-of-pocket costs of $400,000. In the aftermarket on the first day of trading the closing share price was $32. What was the total issue cost as a percent of the issuers proceeds net of all costs? Attach Eilo
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