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    Transaction Fee of Underwriting

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    Sherman Brothers, Inc., sold 4 million shares in its IPO, at a price of $18.50 per share. Management negotiated a fee (the underwriting spread) of 7% on this transaction. What was the dollar cost of this fee?

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    Solution Preview

    If Sherman Brothers, Inc. sold 4,000,000 shares at a price of $18.50 per share, it received $74,000,000 in its ...

    Solution Summary

    This solution explains how to calculate the transaction fee due to an underwriting firm based on a percentage fee.