Green Lantern Enterprises has just completed an initial public offering. The firm sold 1,500,000 new shares (the primary offering). In addition, existing shareholders sold 325,000 shares (the secondary issue). The new shares were offered to the public at $18.00 per share and underwriters received a spread of $1.18 a share. The legal, administrative, and other costs were $500,000 and were split proportionately between the company and the selling stockholders. How much money did the company receive before paying its proportion of the direct costs? 25230000 Correct response: 25,230,000 Click "Verify" to proceed to the next part of the question. Suppose that on the first day of trading, the price of Green Lantern's stock is $21.50 per share. What is the cost to the firm from the underpricing? 5250000 Correct response: 5,250,000 Click "Verify" to proceed to the next part of the question. Given that the company receives $25,230,000 from the issue before paying the direct costs and that the cost from underpricing is $5,250,000, what are the total costs of the issue to the firm as a percentage of the funds raised (the total amount paid by investors for the company's portion of the shares)? Enter your answer as a percentage. Do not include the percentage sign in your answer. Number
Green Lantern Enterprises has just completed an initial public offering. The firm sold 1,500,000 new shares (the primary offering). In addition, existing shareholders sold 325,000 shares (the secondary issue). The new shares were offered to the public at $18.00 per share and underwriters received a spread of $1.18 a share. The legal, administrative, and other costs were $500,000 and were split proportionately between the company and the selling stockholders. How much money did the company receive before paying its proportion of the direct costs? 25230000 Correct response: 25,230,000 Click "Verify" to proceed to the next part of the question. Suppose that on the first day of trading, the price of Green Lantern's stock is $21.50 per share. What is the cost to the firm from the underpricing? 5250000 Correct response: 5,250,000 Click "Verify" to proceed to the next part of the question. Given that the company receives $25,230,000 from the issue before paying the direct costs and that the cost from underpricing is $5,250,000, what are the total costs of the issue to the firm as a percentage of the funds raised (the total amount paid by investors for the company's portion of the shares)? Enter your answer as a percentage. Do not include the percentage sign in your answer. Number
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:Green Lantern Enterprises has just completed an initial public offering. The firm sold 1,500,000 new
shares (the primary offering). In addition, existing shareholders sold 325,000 shares (the secondary
issue). The new shares were offered to the public at $18.00 per share and underwriters received a
spread of $1.18 a share. The legal, administrative, and other costs were $500,000 and were split
proportionately between the company and the selling stockholders.
How much money did the company receive before paying its proportion of the direct costs?
25230000
Correct response: 25,230,000
Click "Verify" to proceed to the next part of the question.
Suppose that on the first day of trading, the price of Green Lantern's stock is $21.50 per share. What is
the cost to the firm from the underpricing? 5250000
Correct response: 5,250,000
Click "Verify" to proceed to the next part of the question.
Given that the company receives $25,230,000 from the issue before paying the direct costs and that the
cost from underpricing is $5,250,000, what are the total costs of the issue to the firm as a percentage of
the funds raised (the total amount paid by investors for the company's portion of the shares)? Enter
your answer as a percentage. Do not include the percentage sign in your answer. Number
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