Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I'm sure the answers from A to D is correct, and I want to know how to calculate the rest of the questions. Thank you

image text in transcribedimage text in transcribed

I'm sure the answers from A to D is correct, and I want to know how to calculate the rest of the questions. Thank you so much!

Series B Venture Capital Financing: Three years after the first round of financing, Live Deliciously received a second Series B round of venture capital financing. The investors provided $76.0 million for a 30.0% stake of the firm. Series A Venture Capital Financing: Live Deliciously is a start-up firm in need of financing after surviving to this point only on the savings of the founder. That founder, Phillip Black, finds a Series A venture capital investor group willing to pay $29.0 million in order to acquire a 20.0% stake in the firm. This would be the first use of any outside capital by the firm. A) What was Live Deliciously's implied firm value after the Series A financing round? (Round your answer to 3 decimal places. Use the unrounded value in any subsequent calculations that need it) $ 145 million B) What was Phillip Black's percentage ownership stake after the Series A financing? (Round your answer to 3 decimal places. Use the unrounded value in any subsequent calculations that need it) 80 C) What was the dollar value of Phillip Black's ownership stake after the Series A financing? (Round your answer to 3 decimal places. Use the unrounded value in any subsequent calculations that need it) $ 116 million D) What was the implied firm value after the Series B round of financing? (Round your answer to 3 decimal places. Use the unrounded value in any subsequent calculations that need it) The firm is worth $ 253.3333 million after the Series B round. E) Due to the Series B round of financing, Phillip Black's percentage ownership stake of Live Deliciously has decreased by % of total ownership to %, whereas the value of Phillip Black's ownership stake has changed by $ million to $ million. (Round your answer to 3 decimal places. Use the unrounded values in any subsequent calculations that need them) F) Due to the Series B round of financing, the Series A investors' ownership stake of Live Deliciously has decreased by % of total ownernship to %, whereas the value of the Series A investors' ownership stake has changed by $ million to $ million. (Round your answer to 3 decimal places. Use the unrounded values in any subsequent calculations that need them) Initial Public Offering (IPO): The owners of the firm (Phillip Black, the Series A investors, & the Series B investors) collectively decided 5 years later to undergo an IPO. The IPO involved the flotation of 52.400 million new shares for a total of $353.700 million from investors. The shares issued through the IPO correspond to 40.0% of Live Deliciously's ownership. The issue price was set at $6.75/share. However, on the first day of trading after the IPO, the firm's stock closed at $9.50/share. The underwriting fees were $34.060 million. G) What was the IPO underwriters' spread per share? (Round your answer to 3 decimal places. Use the unrounded value in any subsequent calculations that need it) share of spread per share H) What was the capital amount raised (net of underwriting) costs from the IPO? That is, how much new cash does Live Deliciously now have available as a result of the IPO to spend on their operations? (Round your answer to 3 decimal places. Use the unrounded value in any subsequent calculations that need it) million to spend on on operations from the IPO 1) How much was the underpricing per share? And what was the total underpricing cost? (Round your answers to 3 decimal places. Use the unrounded values in any subsequent calculations that need them) share underpricing million total underpricing cost J) What was the total cost of the issuance, including all direct and indirect costs? (Round your answer to 3 decimal places. Use the unrounded value in any subsequent calculations that need it) million of costs in total for the IPO K) What was the value of the entire company implied by the price that shares were sold to the IPO investors at? What does the closing price at the end of the first day of trading reveal that the share market believes that the entire firm is actually worth? (Round your answers to 3 decimal places. Use the unrounded values in any subsequent calculations that need them) The firm value implied by the issue price of the IPO is $ million. The closing price at the end of the first day implies that the firm was actually worth $ million. L) How much did the pre-IPO investors (Phillip Black, the Series A investors, & the Series B investors) as a group collectively realize in wealth loss due to the IPO underpricing? (Round your answer to 3 decimal places. Use the unrounded value in any subsequent calculations that need it) The pre-IPO investors lose $ million as a group due to underpricing. M) How much did Phillip Black (the founder) individually realize in wealth loss due to the IPO underpricing? (Round your answer to 3 decimal places. Use the unrounded value in any subsequent calculations that need it) Phillip Black lost $ million individually due to underpricing. N) If there had been no underpricing, instead of selling 40.0% of their firm through the IPO, the pre-IPO investors could have raised exactly as much money while only selling what percent of the total ownership? (Round your answer to 3 decimal places. Use the unrounded value in any subsequent calculations that need it) The pre-IPO investors only had to give up % control if the shares had not been underpriced. O) Assume now that there had been zero underpricing or overpricing. In addition, assume that the pre-IPO investors each retain exactly the same number of shares after the IPO as they had prior to the IPO. How many new shares would have been issued through the IPO now? What would have been the market price of the shares of Live Deliciously after the IPO (Round your answers to 3 decimal places. Use the unrounded value of the first part if you need it to calculate the second part) If there had been zero mispricing, there would have been million new shares issued through the IPO. Those shares would have been worth $ per share. Series B Venture Capital Financing: Three years after the first round of financing, Live Deliciously received a second Series B round of venture capital financing. The investors provided $76.0 million for a 30.0% stake of the firm. Series A Venture Capital Financing: Live Deliciously is a start-up firm in need of financing after surviving to this point only on the savings of the founder. That founder, Phillip Black, finds a Series A venture capital investor group willing to pay $29.0 million in order to acquire a 20.0% stake in the firm. This would be the first use of any outside capital by the firm. A) What was Live Deliciously's implied firm value after the Series A financing round? (Round your answer to 3 decimal places. Use the unrounded value in any subsequent calculations that need it) $ 145 million B) What was Phillip Black's percentage ownership stake after the Series A financing? (Round your answer to 3 decimal places. Use the unrounded value in any subsequent calculations that need it) 80 C) What was the dollar value of Phillip Black's ownership stake after the Series A financing? (Round your answer to 3 decimal places. Use the unrounded value in any subsequent calculations that need it) $ 116 million D) What was the implied firm value after the Series B round of financing? (Round your answer to 3 decimal places. Use the unrounded value in any subsequent calculations that need it) The firm is worth $ 253.3333 million after the Series B round. E) Due to the Series B round of financing, Phillip Black's percentage ownership stake of Live Deliciously has decreased by % of total ownership to %, whereas the value of Phillip Black's ownership stake has changed by $ million to $ million. (Round your answer to 3 decimal places. Use the unrounded values in any subsequent calculations that need them) F) Due to the Series B round of financing, the Series A investors' ownership stake of Live Deliciously has decreased by % of total ownernship to %, whereas the value of the Series A investors' ownership stake has changed by $ million to $ million. (Round your answer to 3 decimal places. Use the unrounded values in any subsequent calculations that need them) Initial Public Offering (IPO): The owners of the firm (Phillip Black, the Series A investors, & the Series B investors) collectively decided 5 years later to undergo an IPO. The IPO involved the flotation of 52.400 million new shares for a total of $353.700 million from investors. The shares issued through the IPO correspond to 40.0% of Live Deliciously's ownership. The issue price was set at $6.75/share. However, on the first day of trading after the IPO, the firm's stock closed at $9.50/share. The underwriting fees were $34.060 million. G) What was the IPO underwriters' spread per share? (Round your answer to 3 decimal places. Use the unrounded value in any subsequent calculations that need it) share of spread per share H) What was the capital amount raised (net of underwriting) costs from the IPO? That is, how much new cash does Live Deliciously now have available as a result of the IPO to spend on their operations? (Round your answer to 3 decimal places. Use the unrounded value in any subsequent calculations that need it) million to spend on on operations from the IPO 1) How much was the underpricing per share? And what was the total underpricing cost? (Round your answers to 3 decimal places. Use the unrounded values in any subsequent calculations that need them) share underpricing million total underpricing cost J) What was the total cost of the issuance, including all direct and indirect costs? (Round your answer to 3 decimal places. Use the unrounded value in any subsequent calculations that need it) million of costs in total for the IPO K) What was the value of the entire company implied by the price that shares were sold to the IPO investors at? What does the closing price at the end of the first day of trading reveal that the share market believes that the entire firm is actually worth? (Round your answers to 3 decimal places. Use the unrounded values in any subsequent calculations that need them) The firm value implied by the issue price of the IPO is $ million. The closing price at the end of the first day implies that the firm was actually worth $ million. L) How much did the pre-IPO investors (Phillip Black, the Series A investors, & the Series B investors) as a group collectively realize in wealth loss due to the IPO underpricing? (Round your answer to 3 decimal places. Use the unrounded value in any subsequent calculations that need it) The pre-IPO investors lose $ million as a group due to underpricing. M) How much did Phillip Black (the founder) individually realize in wealth loss due to the IPO underpricing? (Round your answer to 3 decimal places. Use the unrounded value in any subsequent calculations that need it) Phillip Black lost $ million individually due to underpricing. N) If there had been no underpricing, instead of selling 40.0% of their firm through the IPO, the pre-IPO investors could have raised exactly as much money while only selling what percent of the total ownership? (Round your answer to 3 decimal places. Use the unrounded value in any subsequent calculations that need it) The pre-IPO investors only had to give up % control if the shares had not been underpriced. O) Assume now that there had been zero underpricing or overpricing. In addition, assume that the pre-IPO investors each retain exactly the same number of shares after the IPO as they had prior to the IPO. How many new shares would have been issued through the IPO now? What would have been the market price of the shares of Live Deliciously after the IPO (Round your answers to 3 decimal places. Use the unrounded value of the first part if you need it to calculate the second part) If there had been zero mispricing, there would have been million new shares issued through the IPO. Those shares would have been worth $ per share

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Lessons In Corporate Finance

Authors: Paul Asquith, Lawrence A. Weiss

2nd Edition

1119537835, 978-1119537830

More Books

Students also viewed these Finance questions

Question

What was the influence of the strength of the treatment?

Answered: 1 week ago