Problem
Bellex Technologies agreed to complete its IPO on a best-effort basis. The company's investment bank demanded a spread of 11 percent of the offer price, which was set at $28.70 per share. Three million shares were issued, however, the bank was overly optimistic and eventually was able to sell all of the stock for only $24.80 per share.
Requirement:
Question: What were the proceeds for the issuer and the underwriter?
Note: Explain in detail and show all computations in proper way.