Profit or Loss on New Stock Issue Beedles Inc needed to raise $14 million in an IPO and chose Security Brokers Inc to underwrite the offering The agreement stated that Security Brokers would sell 3 million shares to the public and provide $14 million in net proceeds to Beedles The out of pocket expenses incurred by Security Brokers in the design and distribution of the issue were $450,000 What profit or loss would Security Brokers incur if the issue were sold to the public at the following average price Write out answer completely For example, 5 million should be entered as 5,000,000 Round answers to the nearest dollar Loss should be indicated by aminus sign $5 25 per share $ $6 25 per share $ $4 25 per share $ Pricing Stock Issues in an IPO Zang Industries has hired the investment banking firm of Eric, Schwartz, Mann (ESM) to help it go public Zang and ESM agree that Zang's current value of equity is $56 million Zang currently has 3 million shares outstanding and will issue 1 9 million new shares ESM charges a 6 spread What is the correctly valued offer price Do not round intermediate calculations Round answer to the nearest cent $ How much cash will Zang raise net of the spread (use the rounded offer price) Write out answer completely For example, 5 million should be entered as 5,000,000 Round answer to the nearest dollar $

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Profit or Loss on New Stock Issue Beedles Inc. needed to raise $14 million in an IPO and chose Security Brokers Inc. to underwrite the

Profit or Loss on New Stock Issue

Beedles Inc. needed to raise $14 million in an IPO and chose Security Brokers Inc. to underwrite the offering. The agreement stated that Security Brokers would sell 3 million shares to the public and provide $14 million in net proceeds to Beedles. The out-of-pocket expenses incurred by Security Brokers in the design and distribution of the issue were $450,000. What profit or loss would Security Brokers incur if the issue were sold to the public at the following average price? Write out answer completely. For example, 5 million should be entered as 5,000,000. Round answers to the nearest dollar. Loss should be indicated by aminus sign.

$5.25 per share? $_____
$6.25 per share? $_____
$4.25 per share? $_____

Pricing Stock Issues in an IPO

Zang Industries has hired the investment banking firm of Eric, Schwartz, & Mann (ESM) to help it go public. Zang and ESM agree that Zang's current value of equity is $56 million. Zang currently has 3 million shares outstanding and will issue 1.9 million new shares. ESM charges a 6% spread.

What is the correctly valued offer price? Do not round intermediate calculations. Round answer to the nearest cent. $_____________

How much cash will Zang raise net of the spread (use the rounded offer price)? Write out answer completely. For example, 5 million should be entered as 5,000,000. Round answer to the nearest dollar.

$ _____________