ii. How many shares should the company sell to the public? (1 mark)

iii. For a stand-by service, how much commission does the investment bank earn? (1 mark)

b) Answer parts i, ii and iii based on the information below: ABC Learning Pty Ltd needs to raise $85 million for business growth (this is the net amount required by company). The board has decided to raise $49 million of debt capital and the remaining $36 million thro equity capital by IPO. The underwritten service was on the stand-by basis, and the investment bank charges a commission of 4%. The agreed IPO price is $15 per share to the public. i. If the IPO is successful, what are the total proceeds of the share offering? (1 mark) Page 13