During the discussion of the potential IPO and West Coast Yachts’

future, Dan states that he feels the company should raise £50 million. However, Larissa points out that if the company needs more cash soon, a secondary offering close to the IPO would be potentially problematic. Instead she suggests that the company should raise £80 million in the IPO. How can we calculate the optimal size of the IPO? What are the advantages and disadvantages of increasing the size of the IPO to £80 million?