Question

The Collins Co. has just gone public. Under a firm commitment agreement, the company received $33.50 for each of the 4.25 million shares sold. The initial offering price was $35.90 per share, and the stock rose to $44.00 per share in the first few minutes of trading. The company paid $920,000 in legal and other direct costs and $280,000 in indirect costs.
  
What is the net amount raised? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Round your answer to the nearest whole number, e.g., 32.)
  
Net amount raised            $
  
What are the total direct costs? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Round your answer to the nearest whole number, e.g., 32.)
  
Direct costs            $
  
What are the total indirect costs? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Round your answer to the nearest whole number, e.g., 32.)
  
Indirect costs            $
  
What are the total costs? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Round your answer to the nearest whole number, e.g., 32.)
  
Total costs            $
  
What was the flotation cost as a percentage of funds raised? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
  
Flotation cost percentage             %

Answer 1

The net amount raised
Company received	=33.5*4250000	142,375,000
Less:
Payment Made	=920000+280000	1,200,000
Net Amount Raised		141,175,000
total direct costs
Difference between Initial offering price & amount received	=4250000*(35.90-33.5)	10,200,000
Add: Legal & other direct cost		920,000
direct costs		11,120,000
total indirect costs
Difference between Stock price in first minutes of trading & Initial offering price	=4250000*(44-35.90)	34,425,000
Add: Other indirect costs		280,000
Indirect Costs		34,705,000
Total Cost
Direct Cost+indirect Cost	=11120000+34705000	45,825,000
Floatation Cost
Total Cost/net amount raised	=45825000/142375000	32.19%