II-5. You & Me was founded in 2015 by three graduates of Yuan Ze University. You & Mes user-friendly system was designed to find buyers for houses. Within 3 years, the company was generating revenues of $2 million a year and, despite high leverage, was regarded by investors as one of the hottest new e-commerce businesses. Therefore, the news that the company was preparing to go public generated considerable attention. The companys entire equity capital of 1.2 million shares was owned by three founders. The initial public offering involved the sale of 300,000 shares by the three existing shareholders, together with the sale of a further 700,000 shares by the company in order to provide funds for expansion. The company estimated that the issue would involve legal fees, auditing, printing, and other expenses of $0.8 million, which would be shared proportionately between the selling shareholders and the company. In addition, the company agreed to pay the underwriters a spread of $1.2 per share (this cost also would be shared). The roadshow had confirmed the high investors interest in the issue, and investors release their willing to invest shares at a price of $20 a share. The underwriters, however, suggested an issue price of $17 a share for two reasons. First, investors were not the same as firm orders, so the price may be too optimistic. Second, it is more important to set a relatively lower price to attract more investors to ensure the success of the issue. Finally, after a thorough discussion with management team of You & Me Inc., the company decides to sale the new share for $ 17 a share. The first-day closing price on the IPO was $21 a share. Please answer the following questions: (12pts) (1) What is a roadshow? (2) What is underwriting spread? (3) What is the total direct expenses of the IPO? (4) What is the total funds raised by the company? (5) What is the underpricing cost? (6) What is the cost of IPO as a proportion of the market value of the issue?