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Bavaria Brew Bavaria Brew is planning an IPO. Under the terms of the IPO, Bavaria Brew will issue 8 million shares at an offer price

Bavaria Brew

Bavaria Brew is planning an IPO. Under the terms of the IPO, Bavaria Brew will issue 8 million shares at an offer price of $35 per share. The underwriter charges an 10% underwriting fee and direct costs are estimated to be $7 million. The stock is expected to trade at $42 at the end of the first trading day.

11. What is the initial return earned by investors on the Bavaria Brew IPO?

a.

20%

b.

15%

c.

17%

d.

22%

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