On January 20. Sullivan Inc.. sow 8 million shares of stock in an SEO. The market price of Sullivan at the time was $42 50 per share Of the 8 million shares sold.
4 million shares were primary shares being sold by the company, and the remaining 4 million shares were being sold by the venture capital investors.
Assume the underwriter charges 5.3% of the gross proceeds as an underwriting fee
a. How much money did Sullivan raise?
b. How much money did the venture capitalists receive?
c. If the stock price dropped 3.3% on the announcement of the SEO and the new shares were sold at that price. how much money would Sullivan receive?