On January 20, Sullivan Inc., sold 8 million shares of stock in an SEO. The...
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On January 20, Sullivan Inc., sold 8 million shares of stock in an SEO. The market price of Sullivan at the time was $41.00 per share. Of the 8 million shares sold, 5 million shares were primary shares being sold by the company, and the remaining 3 million shares were being sold by the venture capital investors. Assume the underwriter charges 4.6% of the gross proceeds as an underwriting fee.
a. How much money did Sullivan raise?
b. How much money did the venture capitalists receive?
c. If the stock price dropped 3.6% on the announcement of the SEO and the new shares were sold at that price, how much money would Sullivan receive?
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