| Cost of Funds raised to company |
|
| Underwriting spread (800000*1.21) |
968000 |
| legal, administrative, and other costs
[175000*800000/1125000] |
124444 |
| Cost of underpricing |
2800000 |
|
|
| Total cost of issue to firm |
3892444 |
Amount of funds raised =Issue price *number of shares offered by
firm
= 14.50*800000
= 11600000
total costs of the issue to the firm as a percentage of the
funds raised = Total cost of issue to firm/Amount of funds
raised
=
3892444/11600000
= 33.56%
**Total shares for allocation of Legal, administrative, and
other costs between company and shareholders = 800000+325000 =
1125000 shares
