Young Corpoartion stock currently sells for $40 per share. There are 1 million shares currently outstanding. The company announces plans to raise $5 million by offering shares to the public at a price of $40 per share. The company announces plans to raise $5 million by offering shares to the public of $40 per share.
a. If the underwriting spread is 8%, how many shares will the company need to issue in order to be left with net proceeds of $5 million? (Do not round intermediate calculations. Round your answer to the nearest whole number)
number of shares____________
b. If other administrative costs are $65,000, what is the dollar value of the total direct costs of the issues? (Enter your answer in dollars not in millions. Do not round intermediate calculations. Round your answer to the nearset whole dollar amount)
total direct costs $_____________
c. if the share pricew falls by 5% at the announcement of the plans to proceeed with a seasoned offering, what is the dollar cost of the announcement effect? (Enter your answer in dollars not in millions.)
cost of the annuncement effect $_____________