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BBB Ltd issues an IPO. The company's investment bank demands a spread of 7 per cent...

BBB Ltd issues an IPO. The company's investment bank demands a spread of 7 per cent of the offer price, which is set at $4 per share. 7 million shares are issued. What are the proceeds for the issuer (in millions of dollars to the nearest three decimal places; don’t show $ sign or commas eg 18.404)?

Solutions

Expert Solution

Given Data

  • No of shares issued = 7,000,000
  • Offer price per share = $ 4
  • Investment bank spread = 7%

Formula & Calculation

Proceeds for the issuer = (100%- Spread) * Offer Price * No of shares issued

= (100%-7%) * $4 * 7,000,000

= $ 26,040,000

jeff jeffy answered 2 years ago
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