An online medical advice company just completed an IPO with an investment bank o
ID: 2635863 • Letter: A
Question
An online medical advice company just completed an IPO with an investment bank on a firm-commitment basis. The firm issued 5 million shares of common stock, and the underwriting fees were $4.10 per share. The offering price was $24.90 per share. What were the total proceeds from the common-stock sale? (Round answer to nearest whole dollar, e.g. 5,275.)
Total proceeds = $
How much money did the company receive? (Round answer to nearest whole dollar, e.g. 5,275.) Net proceeds to firm = $
How much money did the investment bank make? (Round answer to nearest whole dollar, e.g. 5,275.) Underwriting spread = $
Explanation / Answer
No. of common shares=5 million , underwriting fees = $4.10 per share.
Offering price = $24.90 per share.
Total Proceeds = 5 million * $24.90 = $124.5 million
Money made by the investment bank = 5 million * $4.10 = $20.5 million.
Money made by the Company = $124.5 million -$20.5 million = $104 million