Concept explainers
a)
To discuss:
To calculate the total proceeds of IPO.
Introduction:
Initial public offering or IPO is the first public sale of a firm’s stock. IPO is usually made by small and growing companies that require additional capital.
b)
To discuss:
To calculate the percentage underwriter discount.
Introduction:
Initial public offering or IPO is the first public sale of a firm’s stock. IPO is usually made by small and growing companies that require additional capital. The underwriting discount is the fee paid to the underwriters by the issuing firm
c)
To discuss:
To calculate the dollar amount of the underwriting fee.
Introduction:
Initial public offering or IPO is the first public sale of a firm’s stock. IPO is usually made by small and growing companies that require additional capital. The underwriting discount is the fee paid to the underwriters by the issuing firm.
d)
To discuss:
To calculate the net proceeds of IPO.
Introduction:
Initial public offering or IPO is the first public sale of a firm’s stock. IPO is usually made by small and growing companies that require additional capital. The net proceeds is the difference between the total proceeds and the underwriting fees.
e)
To discuss:
To calculate the IPO underpricing.
Introduction:
A public offering is defined as the sale of bonds or stocks to the general public when the company or firm that issues the share has to raise a large amount as capital. The percentage change from the final IPO offer price to the IPO market price on the first day in the market is known as IPO underpricing.
f)
To discuss:
To calculate the market capitalization.
Introduction:
A public offering is defined as the sale of bonds or stocks to the general public when the company or firm that issues the share has to raise a large amount as capital. The market capitalization is the total market value of the firm’s outstanding stock.

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Chapter 2 Solutions
PRINCIPLES OF MANAGERIAL FINANCE (SUBSCR
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