Question

In: Economics

A best efforts IPO underwriting comprised 5.8 million shares at an offer price of $28 per...

A best efforts IPO underwriting comprised 5.8 million shares at an offer price of $28 per share. The underwriter's fee was set at 5.85 percent. How many shares were sold if the issuer received $84,324,892?

Solutions

Expert Solution

Ans

underwriter's fee = 5.85% or 0.0585

Percentage of net amount received = 1 - 0.0585 = 0.9415

Hence

NO of share sold = 84,324,892 ÷ ( 28 × 0.9415)= 3,198,728.93


Related Solutions

A company issues a $200 million IPO. The offer price is $5 per share. The underwriter’s...
A company issues a $200 million IPO. The offer price is $5 per share. The underwriter’s spread is 8%. The underwriter has agreed to a stand-by arrangement. For issuing the IPO, the company will pay some admin costs. The admin costs include a legal fee of $50,000, an accountant fee of $30,000 and other admin costs amounting to $170,000. The company’s share price increases by 10% at the end of the first day of trading. However, the offer has not...
Your investment bankers price your IPO at $15.26 per share for 9.5 million shares.
Your investment bankers price your IPO at $15.26 per share for 9.5 million shares. If the price at the end of the first day of trading is $17.16 per share,a. What was the percentage underpricing?b. How much money did the firm miss out on due to underpricing?
______     8.      Assume the offer price for an IPO is set at $25 per share and...
______     8.      Assume the offer price for an IPO is set at $25 per share and the shares issued in the IPO is 10 million. The lead underwriter, however, sells 11.5 million shares to investors at the $25 offer price, planning to use the overallotment option, if needed, to satisfy its short position. Assume that the IPO firm’s stock starts trading on the stock exchange at either $23 per share or $27 per share. In which of these two possible...
Q6(b) (6 marks) A company issues a $280 million IPO. The offer price is set to...
Q6(b) A company issues a $280 million IPO. The offer price is set to $10 per share. The underwriter’s spread is 8%.   The underwriter has agreed to a best-effort arrangement. For issuing the IPO, the company will pay some admin costs. The admin costs include a legal fee of $50,000, an accountant fee of $35,000 and other admin costs amounting to $85,000. The company’s share price increases by 5% at the end of the first day of trading. i.   Determine...
What are the steps involved in an IPO? Discuss “Best effort basis”, “Underwriting”, “Roadshows” and “Book-building”.
What are the steps involved in an IPO? Discuss “Best effort basis”, “Underwriting”, “Roadshows” and “Book-building”.
Suppose, instead, that the investment banker agrees to underwrite the 10 million shares on a best-efforts basis.
Suppose, instead, that the investment banker agrees to underwrite the 10 million shares on a best-efforts basis. The investment banker is able to sell 8.4 million shares for $25.50 per share, and it charges XYZ Corp. $ 0.5 per share sold. $25.50 includes the commission.a) How much money does XYZ Corp. receive?b) What is the profit to the investment banker?c) If the investment bank can sell the shares for only $24.75, how much money does XYZ Corp. receive?d) What is...
Netscape planned to offer 3.5 mln shares at $14 in an IPO. A day before the...
Netscape planned to offer 3.5 mln shares at $14 in an IPO. A day before the offering their underwriters suggested to change the offer to 5 mln shares at $28. Netscape had an IPO on August 8th, 1995 -- 5 mln shares at $28 were offered (excluding the 15% overallotment). During the first day of trading, the price of the stock rose to a maximum of $73 and closed the day at $54. How much money did Netscape ‘leave on...
GeoTech Company will be holding an IPO of two million shares tomorrow. Market expectations are high for this IPO.
GeoTech Company will be holding an IPO of two million shares tomorrow. Market expectations are high for this IPO. The company is expected to pay $1.00 per share starting one year from now. The dividends are then expected to grow at a supernormal rate of 25% for three years, before dropping down to 15% for three more years, and then to 7% afterwards. The 7% growth is then expected to continue for the foreseeable future. What is the gross dollar...
XYZ used an investment bank to do IPO. In IPO, XYZ sold 1 million shares at...
XYZ used an investment bank to do IPO. In IPO, XYZ sold 1 million shares at $68 each. The investment bank charged 7% spread. At the end of the 1st day of trading, XYZ stock price closed at $80. Calculate the total cost of IPO. That is, what is the sum of direct and indirect cost?
1. BJ’s Wholesale Club Holdings went through IPO on 6/28/2018. Approximately 37.5 million shares were offered...
1. BJ’s Wholesale Club Holdings went through IPO on 6/28/2018. Approximately 37.5 million shares were offered at a price of $17/share. A total of $36,656,250 was paid as underwriting fees. The price rose to roughly $21 on the first day of trading. What was BJ’s loss (at best) in this IPO? (0.5)
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT