You need to choose between making a public offering and arranging a private placement.

You need to choose between making a public offering and arranging a private placement. In each case the issue involves $10 million face value of 10-year debt. The following data is available for each: (ignore taxes) ¬ A public issue : The interest rate on the debt would be 8.5%, and the debt would be issued at face value. The underwriting spread would be 1.5%, and other expenses would be $80,000. ¬ A private placement : The interest rate on the private placement would be 9%, but the total issuing expenses would be only $30,000. 1. What is the difference in the proceeds to the company net of expenses?