Problem:
Raybac is about to go public. Its present stockholders own 500,000 shares. The new public issue will represent 800,000 shares. The shares will be priced at $25 to the public with a 4% spread. The out-of pocket costs will be $450,000.
Required:
Question: What are the net proceeds to the firm.
a) 18,750,000
b) 17,200,000
c) 18,250,000
d) 16,175,000
Note: Please provide step by step solution.