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# Profit, loss and sell queries

1. Security Brokers Inc. specializes in underwriting new issues by small firms. On a recent offering of Beedles Inc., the terms were as follows:

Price to Public \$5 per share
Number of shares 3 million
Proceeds to Beedles \$14,000,000
The out-of-pocket expenses incurred by Security Brokers in the design and distribution of the issue were \$300,000. What profit or loss would security Brokers incur if the issue were sold to the publics at the following average price?
a. \$5 per share
b. \$6 per share
c. \$4 per share

2. The Beranek Company, whose stock price is now \$25, needs to raise \$20 million in common stock. Underwriters have informed the firm's management that they must price the new issue to the public at \$22 per share because of signaling effects. The underwriters' compensation will be 5% of the issue price, so Beranek will net \$20.90 per share. The firm will also incur expenses in the amount of \$150,000. How many shares must the firm sell to net \$20 million after underwriting and flotation expenses?

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See the attached file. Thanks

Finance Assignment
1. Security Brokers Inc. specializes in underwriting new issues by small firms. On a recent offering of Beedles Inc., the terms were as follows:

Price to Public \$5 per share
Number of shares 3 million
Proceeds to Beedles \$14,000,000
The out-of-pocket expenses incurred by Security Brokers in the design and distribution of the issue were \$300,000. What profit or loss would security Brokers incur if the issue were sold to ...

#### Solution Summary

This post shows how to calculate profit, loss and sell queries

\$2.19