Question:
Invester banker 5 enters into a best efforts arrangement to try and sell 10 million shares of stock at $15.00 per share for Rogers Company. The investment banker 5 incurs expenses of $300,000 in floating the issue and the company incurs expenses of $100,000. The investment banker 5 will receive 10% of the proceeds of the offering.
Please do a step-by step (equation) process for each problem for learning purposes.
If the offering is successful and sells out at the expected price of $15.00, how much money will the company receive?
If the offering is successful and sells out at the expected price of $15.00, how much money will the investment banker 5 receive?
If the offering is partially successful; all shares are sold, but at a price of $10.00. How much does the company recieve?
If the offering is partially successful; all shares are sold, but at a share price of $10.00. How much does the investment banker 5 receive?
Who bears more risk with a best efforts deal, the company or the investment banker 5? Why?