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DRK, Inc., has just sold 240,000 shares in an initial public offering. The underwriter’s explicit fees...

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Finance

DRK, Inc., has just sold 240,000 shares in an initial publicoffering. The underwriter’s explicit fees were $144,000. Theoffering price for the shares was $32, but immediately upon issue,the share price jumped to $33.00.

a. What is the total cost to DRK of the equityissue?

Total Cost________

b. Is the entire cost of the underwriting asource of profit to the underwriters?

___ Yes

___No

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