Answer:
$12.20 per share for a total of $61,000,000
Explanation:
Calculation to determine how much will the managing underwriter's fee will total:
First step is to calculate the underwriting risk. Amount
Underwriting risk=($0.65 - $0.40)
Underwriting risk=$0.25
Second step is to calculate The total spread is
Total spread=($0.15+ $0.25 +$0.40 )
Total spread=$0.80
Now let determine the amount The issuer will receive and the Total
Amount received = ($13.00 - $0.80)
Amount received=$12.20 per share
Total= ($12.20 x 5,000,000 shares)
Total = $61,000,000
Therefore When the issue is completely sold, the managing underwriter's fee will total:$12.20 per share for a total of $61,000,000
