1. Calculating Costs of Issuing Stock Paige's Purses, Inc. needs to raise $26.30 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 $63 per share and Paige's will receive $48.25 per share. What is the underwriter's spread per share on the issue?
A $63
B $48.25
C $0
D $14.75
2. Suppose a firm pays total dividends of $300,000 out of net income of $2.5 million. What would the firm's payout ratio be?
A .30
B 8.333
C 1.20
D .120