Exciting Stock Offering from McDougal Entertainment

How much will McDougal Entertainment receive from this stock offering?

McDougal Entertainment is offering 75,000 shares of stock to the public in a general cash offer. The offer price is $36 a share and the underwriter's spread is 7.5 percent. The administrative costs are estimated at $350,000.

Final answer:

McDougal Entertainment will receive $2,147,500 from its stock offering after taking into account the underwriter's spread and the administrative costs.

Explanation:

In this exciting stock offering, McDougal Entertainment will receive $2,147,500 in total. Let's break down how we arrived at this final amount.

Initially, McDougal Entertainment is offering 75,000 shares of stock at $36 each, totaling $2,700,000 ($36/share x 75,000 shares).

However, they have to consider the underwriter's spread of 7.5%, which amounts to $202,500 ($2,700,000 x 7.5%).

In addition, there are administrative costs of $350,000 associated with the stock offering.

By subtracting the underwriter's spread and administrative costs from the total offer amount, McDougal Entertainment will receive $2,147,500.