Young Corporation stock currently sells for $30 per share. There are 1 million shares currently outstanding. The

Question:

Young stock currently sells for $30 per share. There are 1 million shares currently outstanding. The company announces plans to raise $3 million by offering shares to the public at a price of $30 per share.
a. If the underwriting spread is 6 percent, how many shares will the company need to issue in order to be left with net proceeds of $3 million?
b. If other administrative costs are $60,000, what is the dollar value of the total direct costs of the issue?
c. If the share price falls by 3 percent at the announcement of the plans to proceed with a seasoned offering, what is the dollar cost of the announcement effect?

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...