Attempts

Average no score out of 3/ 3

5. IPO stock valuation

Suppose Blume Corp. is going public and, based on the bookbuilding process, decides it will be issuing 300,000 shares of common stock to raise capital to fund the companys proposed expansion. Suppose a Dutch auction (an auction in which the auctioneer begins with a high asking price and lowers it until some bidder accepts the price) is used to allocate shares in the Blume Corp. IPO. The following table shows the number of shares requested by potential bidders.

Bids	Number of Shares Requested	Price per Share
Bidder 1	50,000	$64
Bidder 2	100,000	$58
Bidder 3	150,000	$50
Bidder 4	200,000	$48
Bidder 5	250,000	$44
Bidder 6	300,000	$39

To sell the 300,000 shares, Blume Corp.s IPO minimum offer price should be

.The total amount of funding raised will be

.Given the typical 7 percent transaction cost due to the issuing firm, the IPO would result in a transaction cost of

.