Deluxe Furnishings, Inc. is planning to offer its stock to the general public in an Initial Public Offering $($IPO$).$ Deluxe Furnishings has hired the Stanton Security Advisers investment banking firm to represent it in this IPO process. Assume that Stanton Security offers the stock of Deluxe Furnishings to the general public for $$45\mathrm{.}00$ per share. However, at the conclusion of trading on the stock market on the first day of this IPO, the closing price per share for Deluxe Furnishings$$ stock was $$52\mathrm{.}50.$ On this first trading day, $550,000$ shares of Deluxe Furnishings$$ stock was sold.

a$.$ Based on this information, calculate the amount of $$lost$$ proceeds on this first day of the Deluxe Furnishings$$ IPO.

$31.32.$ Floral Creations, Inc. wishes to raise $$2,300,000$ in new common stock sales to expand its store facilities into new geographical markets. Market Analysts, Inc., the firm$$s investment banker, has informed Floral Creations$$ management that the new stock shares will have to be sold at a price of $$70$ per share, due to increasing competition in the industry. Market Analysts, the underwriter for this new stock issue, will receive $7\%$ of the issue price. Given this situation, Floral Creations will receive a net amount of $$65\mathrm{.}10$ for each new share sold. Floral Creations will also incur expenses of $$38,000$ for this new stock issue. How many new stock shares must Floral Creations sell to net $$2,300,000$ after underwriting and fixed flotation expenses?

$33.37.$ Fabulous Food Products, Inc. has contracted for the services of Investment Advisors Plus, an investment banking firm, to assist with their $$Initial Public Offering$($IPO$.$ The following information has been supplied about the proposed IPO:

$$ The pre$-$IPO value of the equity in Fabulous Food Products is $$25,750,000.$

$$ There are currently $2,500,000$ common stock shares outstanding, held by the immediate family members of the firm.

$$ Fabulous Food Products hopes to raise $$5,000,000$ in $$net proceeds$$ from the proposed IPO.

$$ The $$flotation costs$$ that Investment Advisors Plus will charge for this IPO service is $5\%($i$.$e$.,$ F $=5\%).$

Given this information, please answer the following questions about the proposed IPO for Fabulous Food Products, Inc.:

a$.$ What is the value of the $$gross proceeds$$ needed from the IPO to produce the $$5$ million in $$net proceeds$$ that Fabulous Food Products requires?

b$.$ Given your calculations in Question A above, what is the post$-$IPO equity value $($VPost$-$IPO $)$ of Fabulous Food Products, Inc.?

c$.$ Now, given your calculations in Questions A and B$,$ calculate the percentage of post$-$IPO value in Fabulous Food Products, Inc. that the new investors will require.

d$.$ Then, based on your previous calculations, calculate the number of new common stock shares $($n new $)$ that must be sold in the IPO to achieve the required equity percentage for the new investors that you calculated in Question C$.$

e$.$ Finally, calculate the $$offering price per share$($P offer $)$ at which the new IPO common stock shares may be offered to the investing public to achieve the desired proceeds from the sale.

f$.$ Based on your calculations for the proposed IPO for Fabulous Food Products, Inc., would you advise the firm to go through with the IPO? Please describe.

$38.$ Portfolio Advisors, Inc., an investment banking firm, has provided ABC, Inc. with a suggested $$Initial Public Offering$($IPO$)$ price for ABC, Inc.$$s common stock of $$55.$ Portfolio Advisors, Inc., as the underwriter for this new stock issue, will receive $6\%$ of the issue price. Given this information, what $$net amount$$ will ABC, Inc. receive for each new stock share sold?

$39.40.$ Amlyn Energy, Inc. requires that $$10$ million be raised in their Initial Public Offering $($IPO$).$ Hartsell Investments, Inc. is the investment banking firm underwriting this IPO. Per the agreement between Amlyn Energy, Inc. and Hartsell Investments, Inc., Hartsell plans to sell $2$ million common stock shares to the general public and provide $$10$ million in net proceeds to Amlyn Energy, Inc. The out$-$of$-$pocket expenses that Hartsell Investments, Inc. will have for this IPO process are $$250,000.$ What profit or loss will Hartsell Investments, Inc. realize if the new stock issue is sold to the public at an average price per share of $$6\mathrm{.}00$