Investment Bankers Association (IBA) has an agreement with Northern Airlines to underwrite an equity issue with a market value equal to $11 million. a. If IBA’s underwriting fee is 5 percent and its...

Investment Bankers Association (IBA) has an agreement with Northern Airlines
to underwrite an equity issue with a market value equal to $11 million.
a. If IBA’s underwriting fee is 5 percent and its out-of-pocket expenses associated
with the issue are $125,000, what is the net amount that IBA will receive
under its agreement with Northern?
b. Assuming that the information in part (a) does not change and Northern
incurs out-of-pocket expenses equal to $240,000 for items such as
printing, legal fees, and so on, what will be the net proceeds from the
equity issue for Northern?