Pawprints Paint recently went public in a best efforts offering. The company offered 145,000 shares of stock for sale at an offer price of $23 per share. The administrative costs associated with the offering were $385,000 and the underwriter's spread was 9 percent. After completing their sales efforts, the underwriters determined that they sold a total of 138,700 shares. What were the net proceeds to the company

$2,517,991

Explanation:

Gross proceed = Number of shares sold × price per share = 138,700 × $23 = $3,190,100

Underwriter's spread = $3,190,100 × 9% = $287,109

Administrative costs = $385,000

Net proceeds = Gross proceed - Underwriter's spread - Administrative costs

                       = $3,190,100 - $287,109 - $385,000

Net proceeds = $2,517,991

The net proceeds to the company is $ 2,517,991

Explanation:

Net proceeds are the final amount of money that a seller is entitled to get with respect to the disposal of an asset less all the related expenses like commission, fees and others which are already paid and it is calculated by deducting all the selling costs from the sale price of an asset. For instance, If a person 1 sells his residential property to person 2, then net proceeds shall be the funds person1 is entitled to receive from person2 after all the related costs like realtor’s fees and other costs are taken into due consideration.

Net Proceeds can be derived by summing up all the expenses and deducting the same from the amount that is received as sale proceeds.

Next, this process is to identify and sum up all the expenses that are incurred and related to the transaction.

Lastly, the total costs ascertained from the sale of the asset must be necessarily deducted from the total amount that is gotten as a result of the sale. The leftover amount is the net proceeds.

From the above question,

The net proceeds to the company =Number of Shares actually sold × Offer Price ×(1-Underwriter spread) -Administrative costs.

Gross sales proceeds $ 3,190,100. =138700×23

Lesss

Administrative costs = $385000

Underwriter's spread= = $287,109

=3190100×9

Net proceeds to the company is $ 2,517,991

so they can see what that city is producing and to also see if they can some how get that product. like gold in africa.