Taylor Corporation wants to raise $40 million. Its stock price is now $25 per share. The new issue will be priced at $23 per share. The company will incur expenses of $1 million. The underwriters' compensation will be 8% of the issue price and the underwriter will incur expenses of $1.2 million.
a. How many shares of stock must be sold for the company to net $40 million after costs and expenses?
b. Calculate the profit or loss for the investment banker?