A privately held company has an estimated value of equity equal to$100 million. The founders own 10 million shares. If the companygoes public and sells 1 million shares with no underwriting costs,how much should the per share offer price be? ($10.00) If insteadthe underwriting spread is 7%, what should the offer price be?($9.93)
A privately held company has an estimated value of equity equal to$100 million. The founders own 10 million shares. If the companygoes public and sells 1 million shares with no underwriting costs,how much should the per share offer price be? ($10.00) If insteadthe underwriting spread is 7%, what should the offer price be?($9.93)
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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A privately held company has an estimated value of equity equal to
$100 million. The founders own 10 million shares. If the company
goes public and sells 1 million shares with no underwriting costs,
how much should the per share offer price be? ($10.00) If instead
the underwriting spread is 7%, what should the offer price be?
($9.93)
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