An investment bank (IB) agrees to place 5 million new IPO

shares for BankMed on a best effort basis, with a retainer

fee of $1 million and a success fee of $1.25 per share sold

a) If the IB was able to sell 4,200,000 IPO shares for $54

a share , what are the total revenues of the IB and how much

does BankMed receives?

b) Would BankMed be better off with a fully underwritten offer

from the IB of $225 million for the 5 million shares issued?

c) At what price per share should the IB sell the fully underwritten

5 million shares to the public for the IB to make the same

revenues as in part (a) ?