EBK CORPORATE FINANCE
4th Edition
ISBN: 8220103164535
Author: DeMarzo
Publisher: PEARSON
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Question
Chapter 23, Problem 18P
a.
Summary Introduction
To determine: The money raised by MP Incorporation.
Introduction: When a company sells its share publically in an open market for the first time, it is known as initial public offering (IPO).
b.
Summary Introduction
To determine: The money received by the venture capitalist.
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Students have asked these similar questions
On January 20, Metropolitan Inc. sold 9 million shares of stock in an SEO. The market price of Metropolitan at the time was $41.25 per share. Of the 9 million shares sold, 4 million shares were
primary shares being sold by the company, and the remaining 5 million shares were being sold by the venture capital investors. Assume the underwriter charges 5.3% of the gross proceeds as an
underwriting fee.
a. How much money did Metropolitan raise?
b. How much money did the venture capitalists receive?
c. If the stock price dropped 2.7% on the announcement of the SEO and the new shares were sold at that price, how much money would Metropolitan receive?
a. How much money did Metropolitan raise?
After underwriting fees, Metropolitan raised $
million. (Round to two decimal places.)
On January 20,
Metropolitan
Inc., sold
8
million shares of stock in an SEO. The market price of
Metropolitan
at the time was
$40.25
per share. Of the
8
million shares sold,
5
million shares were primary shares being sold by the company, and the remaining
3
million shares were being sold by the venture capital investors. Assume the underwriter charges
5.1%
of the gross proceeds as an underwriting fee.
a. How much money did
Metropolitan
raise?
b. How much money did the venture capitalists receive?
c. If the stock price dropped
3.4%
on the announcement of the SEO and the new shares were sold at that price, how much money would
Metropolitan
receive?
On January 20,
Sullivan
Inc., sold
10
million shares of stock in an SEO. The market price of
Sullivan
at the time was
$40.25
per share. Of the
10
million shares sold,
4
million shares were primary shares being sold by the company, and the remaining
6
million shares were being sold by the venture capital investors. Assume the underwriter charges
4.5%
of the gross proceeds as an underwriting fee.
a. How much money did
Sullivan
raise?
b. How much money did the venture capitalists receive?
c. If the stock price dropped
2.7%
on the announcement of the SEO and the new shares were sold at that price, how much money would
Sullivan
receive?
Chapter 23 Solutions
EBK CORPORATE FINANCE
Ch. 23.1 - Prob. 1CCCh. 23.1 - Prob. 2CCCh. 23.2 - Prob. 1CCCh. 23.2 - Prob. 2CCCh. 23.3 - List and discuss four characteristics about IPOs...Ch. 23.3 - Prob. 2CCCh. 23.4 - Prob. 1CCCh. 23.4 - What is the average stock price reaction to an...Ch. 23 - Prob. 1PCh. 23 - What are the advantages and the disadvantages to a...
Ch. 23 - Prob. 3PCh. 23 - Suppose venture capital firm GSB partners raised...Ch. 23 - Prob. 5PCh. 23 - Prob. 6PCh. 23 - Prob. 7PCh. 23 - Prob. 8PCh. 23 - Prob. 9PCh. 23 - Prob. 10PCh. 23 - Prob. 11PCh. 23 - Prob. 12PCh. 23 - What is IPO underpricing? If you decide to try to...Ch. 23 - Prob. 14PCh. 23 - Prob. 15PCh. 23 - Prob. 16PCh. 23 - Prob. 17PCh. 23 - Prob. 18PCh. 23 - Prob. 19PCh. 23 - Prob. 20P
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