Underwriter spread per share on the issue

Question

Problem:

Paige's Purses, Inc. needs to raise $25.40 million to finance plant expansion. In discussions with its investment bank, Paige's learns that the bankers recommend an offer price (or gross proceeds) of $54 per share and Paige's will receive $46.00 per share.

Required:

Question: What is the underwriter's spread per share on the issue?

• $8.00
• $46.00
• $54
• $0

Note: Please show how you came up with the solution.