b) Answer parts i and ii based on the information below: Zoom Delivery Ltd, an online parcel delivery service is expanding rapidly after the pandemic caused by Covid-19. It is planning to raise $35 million (this is the net amount required) to finance its business expansion. The offer price is $20 per share to the public and the underwriter charges 7% spread with a standby underwriting arrangement. How many shares does the company have to issue to achieve its capital raising goal? Assume that the issue becomes unsuccessful, as they only receive 95% subscriptions of the total number of shares offered. What would be the total proceeds and how much would the company and the underwriter receive respectively? i.
b) Answer parts i and ii based on the information below: Zoom Delivery Ltd, an online parcel delivery service is expanding rapidly after the pandemic caused by Covid-19. It is planning to raise $35 million (this is the net amount required) to finance its business expansion. The offer price is $20 per share to the public and the underwriter charges 7% spread with a standby underwriting arrangement. How many shares does the company have to issue to achieve its capital raising goal? Assume that the issue becomes unsuccessful, as they only receive 95% subscriptions of the total number of shares offered. What would be the total proceeds and how much would the company and the underwriter receive respectively? i.
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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Question
![b) Answer parts i and ii based on the information below:
Zoom Delivery Ltd, an online parcel delivery service is expanding rapidly after the pandemic caused by
Covid-19. It is planning to raise $35 million (this is the net amount required) to finance its business expansion.
The offer price is $20 per share to the public and the underwriter charges 7% spread with a standby
underwriting arrangement.
i.
How many shares does the company have to issue to achieve its capital raising goal?
ii.
Assume that the issue becomes unsuccessful, as they only receive 95% subscriptions of the total
number of shares offered. What would be the total proceeds and how much would the company and
the underwriter receive respectively?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa111f041-7d0d-4347-853d-a00efbb3e4a0%2F09ca910d-9fd7-4f9a-87e7-93b3dda0268f%2Fckcuoni_processed.jpeg&w=3840&q=75)
Transcribed Image Text:b) Answer parts i and ii based on the information below:
Zoom Delivery Ltd, an online parcel delivery service is expanding rapidly after the pandemic caused by
Covid-19. It is planning to raise $35 million (this is the net amount required) to finance its business expansion.
The offer price is $20 per share to the public and the underwriter charges 7% spread with a standby
underwriting arrangement.
i.
How many shares does the company have to issue to achieve its capital raising goal?
ii.
Assume that the issue becomes unsuccessful, as they only receive 95% subscriptions of the total
number of shares offered. What would be the total proceeds and how much would the company and
the underwriter receive respectively?
![Question 7.
The questions parts a) and b) below are independent questions which do not relate to each other.
a) Boronia Ltd, a tech firm in Sydney, issues a $75 million (the gross amount before any costs come off) IPO
underwritten at $16 per share. The offer price to the public is $20 per share. The firm's legal fees, registration
fees, and other administrative costs are $550,000. The firm's stock price increases 25% on the first trading
day. What is the firm's total cost of issuing the securities? Round your answer to the nearest cents. "](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa111f041-7d0d-4347-853d-a00efbb3e4a0%2F09ca910d-9fd7-4f9a-87e7-93b3dda0268f%2Fyncmhp_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Question 7.
The questions parts a) and b) below are independent questions which do not relate to each other.
a) Boronia Ltd, a tech firm in Sydney, issues a $75 million (the gross amount before any costs come off) IPO
underwritten at $16 per share. The offer price to the public is $20 per share. The firm's legal fees, registration
fees, and other administrative costs are $550,000. The firm's stock price increases 25% on the first trading
day. What is the firm's total cost of issuing the securities? Round your answer to the nearest cents. "
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