A company wants to raise $400 million in a new stock issue. Its investment banker indicates that the sale of new stock will percent underpricing and a 4 percent spread (Hint: the underpricing is 5 percent of the current stock price, and the spread of the issue price) a Assuming the company's stock price does not change from its current price of $65 per share, what would be the issue p public after underpricing? How many shares would the company need to sell? Note: Round intermediate calculations to 2 decimal places. Round your answers to 2 decimal places. Enter "Number answer in millions. 4 Issue price Number of shares million b. How much money will the investment banking syndicate earn on the sale? Note: Round intermediate calculations to 2 decimal places. Enter your answer in millions rounded to 2 decimal places. Investment bankers' revenue million
A company wants to raise $400 million in a new stock issue. Its investment banker indicates that the sale of new stock will percent underpricing and a 4 percent spread (Hint: the underpricing is 5 percent of the current stock price, and the spread of the issue price) a Assuming the company's stock price does not change from its current price of $65 per share, what would be the issue p public after underpricing? How many shares would the company need to sell? Note: Round intermediate calculations to 2 decimal places. Round your answers to 2 decimal places. Enter "Number answer in millions. 4 Issue price Number of shares million b. How much money will the investment banking syndicate earn on the sale? Note: Round intermediate calculations to 2 decimal places. Enter your answer in millions rounded to 2 decimal places. Investment bankers' revenue million
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:A company wants to raise $400 million in a new stock issue. Its investment banker indicates that the sale of new stock will require 5
percent underpricing and a 4 percent spread (Hint: the underpricing is 5 percent of the current stock price, and the spread is 4 percent
of the issue price)
a Assuming the company's stock price does not change from its current price of $65 per share, what would be the issue price to the
public after underpricing? How many shares would the company need to sell?
Note: Round intermediate calculations to 2 decimal places. Round your answers to 2 decimal places. Enter "Number of shares"
answer in millions.
4
Issue price
Number of shares
million
b. How much money will the investment banking syndicate earn on the sale?
Note: Round intermediate calculations to 2 decimal places. Enter your answer in millions rounded to 2 decimal places.
Investment bankers' revenue
million i
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