Crane Biotech management plans a $110 million IPO in which the offering price to the public will be $80 per share. The company will receive $47.50 per share. The firm's legal fees, SEC registration fees, and other out- of-pocket costs will total $500,000. If the stock price increases 14 percent on the first day of trading, what will be the total cost of issuing the securities?

Crane Biotech management plans a $110 million IPO in which the offering price to the public will be $80 per share. The company will receive $47.50 per share. The firm's legal fees, SEC registration fees, and other out- of-pocket costs will total $500,000. If the stock price increases 14 percent on the first day of trading, what will be the total cost of issuing the securities?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter18: Initial Public Offerings, Investment Banking, And Capital Formation

Section: Chapter Questions

Problem 9MC

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