Question
A company needs to raise $20 million (This is the gross amount required by the company.) from a share offering. The shares are underwritten at
A company needs to raise $20 million (This is the gross amount required by the company.) from a share offering. The shares are underwritten at a fee of 6% of the total amount raised. The underwriter offers best-effort underwriting. Answer the following questions ignoring all other costs in the share offering.
If the company receives a subscription for 100% of the total shares offered, calculate how much the company would receive from the share offering.
The company would receive $
If the company only receives subscriptions for 96.5% of the total shares offered, calculate how much the company would receive from the share offering.
The company would receive $
If the company only receives subscriptions for 96.5% of the total shares offered, calculate how much the underwriter would receive from the share offering.
The underwriter would receive $
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Tidy Finance With R
Authors: Christoph Scheuch, Stefan Voigt, Patrick Weiss
1st Edition
1032389346, 978-1032389349
