Dixon Corporation is considering a public offering of common stock. The firm will offer one million shares of common stock for sale. The estimated selling price is $30 per share with Dixon Corp. receiving $26.25 per share after the offering. Registration fees are estimated at $275,000.
Use this information to answer the following:
What is the spread in percent?
What are the total expenses for the issue?
If Dixon Corp needs to generate $28 million, how many shares will have to be sold?
1 - Spread in %.
We have net price = 26.25 and selling price =30
Then Spread in $ per common stock = Selling price - net price =30 -26.25 =3.75
Spread in % = (spread amount/selling price)*100 =(3.75/30)*100 = 12.5%
2 - ...
The solution identifies Dixon Corporation public offering of common stock & issue expenses