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