Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Yore Brewing Company went public five years ago with an issuance of 5 million shares which, as of yesterday, were trading at $50.96 per share.

Yore Brewing Company went public five years ago with an issuance of 5 million shares which, as of yesterday, were trading at $50.96 per share. They are looking to raise capital to start up a chain of brewpubs in California by issuing an additional 1.8 million shares tomorrow in a Seasoned Equity Offering (SEO). Management expects the current publicly traded shares to drop 2.5% at tomorrow's offering and remain at that price after the offering. However their investment bank, hoping for a fully subscribed offering, has suggested an offer price of $48.81 for those investors allocated shares from the SEO (i.e. there will likely be underpricing). The investment banker intends to charge a 7% spread for a firm commitment underwriting of the issue and $250,000 in legal and registration fees. The management team also estimates that at least one month's worth of the CFO's available man-hours were dedicated to preparing the offering and the CFO currently earns $120,000 per year. What is the total dollar amount of expenses (direct and indirect) associated with Yore Brewing Company's SEO in millions?

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

School Finance And Business Management Optimizing Fiscal Facility And Human Resources

Authors: Craig A. Schilling, Daniel R. Tomal

2nd Edition

1475844026, 978-1475844023

More Books

Students also viewed these Finance questions

Question

18b5c3d-7 / 24b-6c3d-2 Simplify.

Answered: 1 week ago

Question

1. What causes musculoskeletal pain?

Answered: 1 week ago