Suppose Sally Rubber Co. is going public and, based on the bookbuilding process, decides it will be issuing 300,000 shares of common stock to raise capital to fund the company's proposed expansion. Suppose a Dutch auction (an auction in which the auctioneer begins with a high asking price and lowers it until some bidder accepts the price) is used to allocate shares in the Sally Rubber Co. IPO. The following table shows the number of shares requested by potential bidders. Bids Bidder 1 Number of Shares Requested Price per Share D 50,000 $65 Bidder 2 100,000 $55 Bidder 3 150,000 $54 Bidder 4 200,000 $48 Bidder 5 250,000 $41 Bidder 6 300,000 $39 To sell the 300,000 shares, Sally Rubber Co.'s IPO minimum offer price should be $ The total amount of funding raised will be $ Given the typical 7 percent transaction cost due to the issuing firm, the IPO would result in a transaction cost of $

Suppose Sally Rubber Co. is going public and, based on the bookbuilding process, decides it will be issuing 300,000 shares of common stock to raise capital to fund the company's proposed expansion. Suppose a Dutch auction (an auction in which the auctioneer begins with a high asking price and lowers it until some bidder accepts the price) is used to allocate shares in the Sally Rubber Co. IPO. The following table shows the number of shares requested by potential bidders. Bids Bidder 1 Number of Shares Requested Price per Share D 50,000 $65 Bidder 2 100,000 $55 Bidder 3 150,000 $54 Bidder 4 200,000 $48 Bidder 5 250,000 $41 Bidder 6 300,000 $39 To sell the 300,000 shares, Sally Rubber Co.'s IPO minimum offer price should be $ The total amount of funding raised will be $ Given the typical 7 percent transaction cost due to the issuing firm, the IPO would result in a transaction cost of $

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Lulu Industries is in the process of selling shares in an auction IPO. At the end of the bidding period, Lulu's investment bank has received the following bids: Number of Shares Bid 50,000 25,000 25,000 100,000 125,000 Price ($) $19.50 $19.25 $19.10 $19.00 $18.75 $18.50 $18.25 $18.00 $17.75 $17.50 What will the offer price of these shares be if Lulu is selling 0.5 million shares? $18.75 $19.10 $18.50 75,000 150,000 240,000 80,000 125,000 $18.25
WAC Inc. is going public and issuing 500,000 shares of common stock. The capital raised in the IPO will fund the company’s proposed expansion. A Dutch auction is used to allocate shares in the WAC IPO. The following table shows the number of shares requested by potential investors in each row. Bids Number of Shares Requested Price per Share Bidder # 1 50,000 $62 Bidder # 2 100,000 60 Bidder # 3 150,000 58 Bidder # 4 200,000 56 Bidder # 5 250,000 54 Bidder # 6 300,000 52 What should be the firm’s IPO offer price? $57 $56 $58 $59
Indigo Inc. is going public and issuing 150,000 shares of common stock. The capital raised in the IPO will fund the company's proposed expansion. A Dutch auction is used to allocate shares in the Indigo IPO. The following table shows the number of shares requested by potential investors in each row. Bids Bidder # 1 Bidder #2 Bidder 3 Bidder # 4 Bidder 5 Bidder # 6 What should be the firm's IPO offer price? O $55 O $51 $57 Number of Shares Requested Price per Share 50,000 $59 100,000 57 150,000 55 200,000 53 250,000 51 300,000 49 O $52 O $54
Roundtree Software is going public using an auction IPO. The firm has received the following bids: Price ($) Number of Shares 15.00 100,000 14.80 220,000 14.60 500,000 14.40 1,000,000 14.20 1,250,000 14.00 840.000 480,000 13.80 Roundtree had previously believed it would issue 1,800,000 shares; however, if Roundtree decides to issue an extra 547,000 shares (for a total of 2,347,000 shares), how much total money will it raise? Roundtree will raise a total amount of $ million. (Round to one decimal place.)
Roundtree Software is going public using an auction IPO. The firm has received the following bids: Number of Shares Price ($) 14.40 14.20 14.00 13.80 13.60 13.40 13.20 160,000 220,000 520,000 1,300,000 1,260,000 880,000 420,000 Assuming Roundtree would like to sell 2.20 million shares in its IPO, what will be the winning auction offer price? The price will be $per share. (Round to the nearest cent.)
Dallas Market Makers is offering 800 shares in a Dutch auction IPO. The following bids have been received. Bidder Quantity Price A 200 $ 25 100 24 100 23 500 22 800 21 B C D E How much will Bidder B have to spend to purchase all of the shares that have been allocated to him? Multiple Choice O $1595.65 $1,955.56 $1,995.83 $2,393.43 $2,433.23
K Roundtree Software is going public using an auction IPO. The firm has received the following bids: Price ($) Number of Shares 14.00 120,000 13.80 200,000 13.60 560,000 13.40 1,100,000 13.20 1,300,000 13.00 12.80 800,000 440,000 Roundtree had previously believed it would issue 2,000,000 shares; however, if Roundtree decides to issue an extra 504,000 shares (for a total of 2,504,000 shares), Roundtree will raise a total amount of $33.1 million. (Round to one decimal place.)
AVC Auctions (AVCA) has offered its 16.6 million shares in a Dutch Auction IPO. The following bids have been received:Bidder Quantity Price 1 4,150,000 $ 25.60 2 5,500,000 $ 25.35 3 7,000,000 $ 25.00 4 2,250,000 $ 24.75How many shares will Bidder 3 be able to purchase? How much will Bidder 3 have to spend to purchase all of the shares that have been allocated to them?
Roundtree Software is going public using an auction IPO. The firm has received the following bids: Number of Shares 120,000 200,000 560,000 1,200,000 1,240,000 800,000 400,000 Price $14.60 14.40 14.20 14.00 13.80 13.60 13.40 Assuming Roundtree would like to sell 2.08 million shares in its IPO, what will the winning auction offer price be? The price will be $ per share. (Round to two decimal places.)
5. IPO stock valuation Suppose Blume Corp. is going public and, based on the bookbuilding process, decides it will be issuing 500,000 shares of common stock to raise capital to fund the company's proposed expansion. Suppose a Dutch auction (an auction in which the auctioneer begins with a high asking price and lowers it until some bidder accepts the price) is used to allocate shares in the Blume Corp. IPO. The following table shows the number of shares requested by potential bidders. Bids Bidder 1 Bidder 2 Bidder 3 Bidder 4 Bidder 5 Bidder 6 Number of Shares Requested Price per Share 50,000 $63 100,000 $59 150,000 $50 200,000 $45 250,000 $41 300,000 $35 To sell the 500,000 shares, Blume Corp.'s IPO minimum offer price should be $ The total amount of funding raised will be $ Given the typical 7 percent transaction cost due to the issuing firm, the IPO would result in a transaction cost of $
(a) Describe what it means if a new company decides to issue its ordinary shares to investors in instalments, and why they might sell shares this way. (b) John’s Building Company needs to raise $100,000 cash from share investors and asks for your advice for designing the sale of the shares. He wants to sell ordinary shares. First, use your imagination to determine a reasonable sale price per share. Then, design a traditional 3 step instalment plan for collection of the cash from investors. Hint: you may consider that the Application period will commence on 1st February 2022. Outline the basic details of your plan, including beginning and ending dates for each stage of your plan.
DFI Corp is offering 600 shares in a Dutch auction IPO. The following bids have been received: Bidder A B. Quantity 100 200 100 300 200 How much will DFI get at the end of this IPO? Price $24 $23 $22 $21 S20 D

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