1) ABC Corporation wishes to increase $20 million. Its stock price is now= $20 per share. New issue will be priced at= $18 per share. Underwriters' compensation will be 5% of issue price. Firm will also acquire expenses of= $200,000.
a) How many shares of stock should be sold for company to net= $20 million after costs and expenses?
b) Out-of-pocket expenses acquired by investment banker were= $300,000. What profit or loss would investment banker realize?
c) Describe terms "best efforts basis" and "underwriting" as they are utilized in investment banking.
d) Determine the most significant single reason for firm to go public.
e) Determine the most significant single reason for the firm NOT to go public.
2) In the present year, assets of Quality Stairs increased by= $175,000 and liabilities decreased by= $15,000. If owners' equity in business is= $475,000 at the ending of year, owners' equity at commencement of year should have been?