Puestion 5 [10 marks] A. Wyatt is a private firm and has 8 million shares outstanding. The company plans to issue 10 million new shares in its initial public offering (IPO). The IPO price has been set at $15 per share, and the underwriting spread is 6%. The IPO is a big success with investors, and the share price rises to $35 at the market close time of the first day of trading. (i) How much would Wyatt raise from the IPO? [1 mark] (ii) What is the dollar amount that Wyatt pays as the underwriting spread? [1 mark] (iii) What is the first-day return for the investors who were able to buy Wyatt's shares at the IPO? [1 mark] (iv) Assume that the post-IPO value at the market close of the first trading day is the firm's fair market value. Suppose Wyatt could have issued shares directly to investors at its fair market value in a perfect market with no underpricing and no underwriting fees. Assuming that Wyatt could raise the full amount of funds that it would have with the investment banker handling the IPO, what is the share price in this case? How many new shares would Wyatt issue? [2 marks]