Question
For dollar amounts, give your answer to the nearest cent. For interest rates, give our answer as a percentage rounded to 2 decimal places. If
For dollar amounts, give your answer to the nearest cent. For interest rates, give our answer as a percentage rounded to 2 decimal places.
If any parts of the question use values from earlier parts, use the EXACT values from earlier parts.
QUESTION START
b) A company makes an initial public offering of shares to raise $320 million, at an offer price of $4 per share. The issue is underwritten at $3.90. The costs of preparing the prospectus, legal fees, ASIC registration and other administrative costs add up to $800,000. The firm's share price closes at $4.50 on its first day of trade. What is the total cost of the IPO. (4 marks)
c) Explain why venture capital funding is critical for start-up firms with a lot of intangible assets. (1 mark)
d) Discuss the problem of information asymmetry in venture capital funding. (1 mark)
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