AtlasPty Ltdneeds $50 million foritsnext growth phase.Itplans to raise the moneyby anInitial Public Offering (IPO) of shares andhasprovided the following information to the market.

The first dividend of $2.50 willbe paidnext year.

After that dividend, dividends are expected to grow annuallyby4% per annum,inperpetuity.

The underwriters will chargea 7per cent spread.

Assume shareholders requireareturn of16%per annum (effective annualrate).

a)Calculate the intrinsic value ofashareinAtlas.

b) Ifthe offer price to the publicis$16.00 per share, calculate the number of shares that Atlas will need to issue to achieveitsgoal (of $50million, net of the underwriter'sfee).

c)Describe three waysinwhich investment banks assistin an IPO. (3marks)

d) Ifinterest rates increase unexpectedly before theIPO iscompleted, what willbethe likely effectonthe value of Atlas'sshares?