BA350 Financial Management: 19-1 Security Brokers Inc. specializes in underwriting new issues

BA350 Financial Management

19-1 Profit or Loss on New Stock Issue
Security Brokers Inc. specializes in underwriting new issues by small firms. On a recent offering of Beedles Inc., the terms were as follows:
Price to public (per share) $5
Number of shares 3,000,000
Proceeds to Beedles $14,000,000
The out-of-pocket expenses incurred by Security Brokers in the design and distribution of the issue were $300,000.
What profit or loss would Security Brokers incur if the issue were sold to the public at an average price of:
a. $5 per share?
b. $6 per share?
c. $4 per share?
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