Case 3: Seasoned Equity Offering On May 15th, Garbage Management Inc. offered to the market 8 million shares in a Season

[answerhappygod]

Case 3: Seasoned Equity Offering
On May 15th, Garbage Management Inc. offered to the market 8million shares in a Seasoned Equity Offering at a price of $40. Theshare price before the offer was $ 46 per share, and the number ofshares outstanding was 14 million. After the announcement of theoffer, the price declined at $42.50 per share. Of the 8 millionshares sold, 5 million shares were new (primary) shares beingissued by the company, while the remaining 3 million shares werebeing sold by venture capital investors who supported the growth ofthe company. Assume that the underwriter charges 5% of the grossproceeds as an underwriting fee (which is then sharedproportionately between primary and secondary shares).