When Microsoft went public, the company sold 2 million new shares (the primary issue). In addition, existing shareholders sold 0.9 million shares (the secondary issue) and kept 22.8 million shares. The new shares were offered to the public at $24, and the underwriters received a spread of $1.51 a share. At the end of the first day's trading, the market price was $38 a share. a. How much money did the company receive before paying its portion of the direct costs? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) b. How much did the existing shareholders receive from the sale of their shares before paying their portion of the direct costs? (Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.) c. If the issue had been sold to the underwriters for $33 a share, how many shares would the company have needed to sell to raise the same amount of cash? (Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.) d. How much better off would the existing shareholders have been if the issue had been sold to the underwriters for $33 a share? (Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.) Answer is complete but not entirely correct. Amount received Amount received $ 44,980,000.00 8 million IS 20,241,000.000 а. b. million Number of shares d. Gain to shareholders million $9,459,000.000 O million с. 1,363,030.300
When Microsoft went public, the company sold 2 million new shares (the primary issue). In addition, existing shareholders sold 0.9 million shares (the secondary issue) and kept 22.8 million shares. The new shares were offered to the public at $24, and the underwriters received a spread of $1.51 a share. At the end of the first day's trading, the market price was $38 a share. a. How much money did the company receive before paying its portion of the direct costs? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) b. How much did the existing shareholders receive from the sale of their shares before paying their portion of the direct costs? (Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.) c. If the issue had been sold to the underwriters for $33 a share, how many shares would the company have needed to sell to raise the same amount of cash? (Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.) d. How much better off would the existing shareholders have been if the issue had been sold to the underwriters for $33 a share? (Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.) Answer is complete but not entirely correct. Amount received Amount received $ 44,980,000.00 8 million IS 20,241,000.000 а. b. million Number of shares d. Gain to shareholders million $9,459,000.000 O million с. 1,363,030.300
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
Related questions
Question
The last three experts have got it wrong. Please help.
Transcribed Image Text:When Microsoft went public, the company sold 2 million new shares (the primary issue). In addition, existing shareholders sold 0.9
million shares (the secondary issue) and kept 22.8 million shares. The new shares were offered to the public at $24, and the
underwriters received a spread of $1.51 a share. At the end of the first day's trading, the market price was $38 a share.
a. How much money did the company receive before paying its portion of the direct costs? (Do not round intermediate calculations.
Enter your answer in millions rounded to 2 decimal places.)
b. How much did the existing shareholders receive from the sale of their shares before paying their portion of the direct costs? (Do not
round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.)
c. If the issue had been sold to the underwriters for $33 a share, how many shares would the company have needed to sell to raise the
same amount of cash? (Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.)
d. How much better off would the existing shareholders have been if the issue had been sold to the underwriters for $33 a share? (Do
not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.)
Answer is complete but not entirely correct.
a.
Amount received
$ 44,980,000.00 X million
b.
Amount received
X million
20,241,000.000
Number of shares
1,363,030.300 X million
c.
d.
Gain to shareholders
$9,459,000.000 X million
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education