Harpers Dog Pens Inc with the help of its investment bank re

Harper’s Dog Pens, Inc., with the help of its investment bank, recently issued $196.6 million of new debt. The offer price on the debt was $1,000 per bond and the underwriter’s spread was 6 percent of the gross proceeds.

Calculate the amount of capital funding Harper’s Dog Pens raised through this bond issue. (Enter your answer in dollars not in millions.)

Solution

underwriter fees = debt amount * underwriter spread

=>$196.6 million * 6%

=>$11.796 million

funds received = debt amount - amount of under writer spread

=>$196.6 million - 11.796 million

=>$184.804 million.

amount of capital funding harpers dog pens raised through this bond issue =$184.804 million.