Harper’s Dog Pens, Inc., with the help of its investment bank, recently issued $194.3 million of new debt. The offer price on the debt was $1,000 per bond and the underwriter’s spread was 5 percent of the gross proceeds. Calculate the amount of capital funding Harper’s Dog Pens raised through this bond issue
Don’s Captain Morgan, Inc., needs to raise $13.90 million to finance plant expansion. In discussions with its investment bank, Don’s learns that the bankers recommend an offer price (or gross proceeds) of $21.80 per share and Don’s will receive $19.25 per share.
Calculate the underwriter’s spread per share on the issue
How many shares of stock will Don’s need to sell in order to receive the $13.90 million it needs?