Assignment:
DiPitro's Paint and Wallpaper, Inc., needs to raise $2.870 million to finance plant expansion. In discussions with its investment bank, DiPitro's learns that the bankers recommend a gross price of $44 per share and that 70,000 shares of stock be sold. The net proceeds on the stock sale leaves DiPitro's with $2.870 million.
Task:
Question 1: Calculate the underwriter's spread in dollars per share on the stock issue.
Question 2: Calculate the underwriter's spread in percentage on the stock issue.
Note: Provide support for your rationale.