Question
ABC, Inc. has just sold 100,000 shares in an IPO. The underwriter's fees were $60,000. The offering price for the share was $40 but immediately
"ABC", Inc. has just sold 100,000 shares in an IPO. The underwriter's fees were $60,000. The offering price for the share was $40 but immediately after the issue, the share price jumped to $44.
a- what is your estimate of the total cost of the equity issue to "ABC"?
b- Is the entire cost of the underwriting a source of profit to the underwriter?
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Multinational Business Finance
Authors: David K. Eiteman, Arthur I. Stonehill, Michael H. Moffett
13th edition
132743469, 978-0132743464
