Black Telecom needs to raise $1.8 billion (face value) of debt funds over the next 2 years.
If it were to use traditional underwritings, the company would expect to have six underwritings over the 2 year span.
The underwriter spread would likely be $7.50 per bond, and out of pocket expenses paid by the
company would total $350,000 per underwriting.
With shelf registrations, the average size offering would probably be $75 million. Here the estimated spread is
$3/bond, and out of pocket expenses of $40,000 per issue are expected.

a. Ingnoring the interest costs, what are the total absolute costs of floatation over the 2 years for traditional
underwritings?(need to know how you compute it)



b. What would it be for the shelf registration method?