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The following information applies for parts b), c) and d). Fidget Spinners Inc. makes an initial public offering of shares to raise $210 million, at
The following information applies for parts b), c) and d). Fidget Spinners Inc. makes an initial public offering of shares to raise $210 million, at an offer price of $3.50 per share. The issue is underwritten at $3.00. The costs of preparing the prospectus, legal fees, ASIC registration and other administrative costs add up to $800,000. The firm's share price closes at $4.20 on its first day of trade. Two years later, Fidget Spinners Inc.wants to raise another $27.3 million to finance a new investment project through a seasoned equity offering at $60 per share, and the underwriter charges a 9% spread. b) Calculate the IPO underwriting spread. (1 mark) c) Calculate the IPO underpricing. (1 mark) d) How many shares have to be issued through the SEO? (2 marks)
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