In its first round of venture funding, SlickBrud received $2 million from a single venture capital firm, DreamVorks, to which it allocated 20 million shares. In a subsequent round, SlickBrud raised $8 million by releasing another 20 million shares to a new venture capital firm. As a result, the equity share of DreamVorks dropped to 20%. Which of the following statements is correct? (Pick one).
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- Vall Street Inc has raised $5 million in an equity financing round last year at a price of $16.667/share. Vall Street identifies a new business opportunity for $10 million and elects to finance this with a new equity raise. Investment banks advise that post raise, Vall Street's equity will be worth $40 million due to all the new business potential. What is the share price of the newly issued shares? $20 $15 $12.667 $100Having heard about IPO underpricing, I put in an order to my broker for 1,110 shares of every IPO he can get for me. After 3 months, my investment record is as follows: IPO Shares Allocatedto Me Price per Share Initial Return A 610 $ 12 7 % B 310 20 13 C 1,110 10 − 2 D 0 14 20 a. What is the average underpricing in dollars of this sample of IPOs? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What is the average initial return on my “portfolio” of shares purchased from the four IPOs that I bid on? When calculating this average initial return, remember to weight by the amount of money invested in each issue. (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.)Hughes Technology Corp. recently went public with an initial public offering in which it received a total of $84.35 million in new capital funding. The underwriter used a firm commitment offering in which the offer price was $18.05 and the underwriter’s spread was $1.30. Hughes also paid legal and other administrative costs of $2.75 million for the IPO. Calculate the number of shares issued through this IPO. (Enter your answer in millions. Round your answer to 2 decimal places.)
- ABC Co. just completed an IPO with an investment back in a firm commitment basis. The firm issue 6 million shares of common stock and the underwriting fees were $2.46 per share. the offering price was $30.00 per share. How much did the investment bank receive in fees; underwriting Spread?Suppose EBV makes a $6M Series A investment in Newco for 1M shares at $6 per share. One year later, Newco has fallen on hard times and receives a a $6M Series B financing from Talltree for 6M shares at $1 per share. The founders and the stock pool have claims on 3M shares of common stock. Going forward, for brevity we will use the term "employees" to mean "founders and the stock pool". Suppose that Series A has broad-base weighted-average antidilution protection. What is the postmoney valuation? $5M $9M $11M $7MABC Co. just completed an IPO with an investment back in a firm commitment basis. The firm issue 6 million shares of common stock and the underwriting fees were $2.46 per share. the offering price was $30.00 per share. what was the total proceeds fro. the common stock sale?
- You are an investment adviser. One of your clients approaches you for your advice on investing inequity shares of Theta Company. You have collected the following data:Earnings per share last year $6.00Payout ratio 0.40Return on equity 0.30Cost of equity capital 0.20The company plans to increase the payout ratio to 60% from year 5.Required:i) Estimate the price of an equity share of this company using an appropriate dividenddiscount model and advise your client whether they should buy a share of the company.ii) Your client is keen to know whether there are any growth opportunities from theirinvestment. Explain to your client the meaning of this concept using appropriatecalculations.iii) If there are positive or negative growth opportunities, explain the reason for suchopportunities.Having heard about IPO underpricing, I put in an order to my broker for 1,000 shares of every IPO he can get for me. After 3 months, my investment record is as follows: IPO A B C D Shares Allocated to Me 500 200 1,000 0 Average underpricing Price per Share $10 20 8 12 a. What is the average underpricing in dollars of this sample of IPOs? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Average initial return Initial Return 7% 12 2 23 b. What is the average initial return on my "portfolio" of shares purchased from the four IPOs that I bid on? When calculating this average initial return, remember to weight by the amount of money invested in each issue. (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.) %Moonscape has just completed an initial public offering. The firm sold 2 million shares at an offer price of $10 per share. The underwriting spread was $0.70 a share. The price of the stock closed at $13.00 per share at the end of the first day of trading. The firm incurred $500,000 in legal, administrative, and other costs. What were flotation costs as a fraction of funds raised? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Answer is complete but not entirely correct. 73.00 % Flotation cost as percent of funds raised
- FBN Inc. has just sold 100,000 shares in an initial public offering. The underwriter’s explicit fees were $70,000. The offering price for the shares was $50, but immediately upon issue, the share price jumped to $53.a. What is your best guess as to the total cost to FBN of the equity issue?b. Is the entire cost of the underwriting a source of profit to the underwriters?Moonscape has just completed an initial public offering. The firm sold 3 million shares at an offer price of $12 per share. The underwriting spread was $0.30 a share. The price of the stock closed at $18.00 per share at the end of the first day of trading. The firm incurred $300,000 in legal, administrative, and other costs. What were flotation costs as a fraction of funds raised? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Flotation cost as percent of funds raised %In the IPO, the firm issued 3,000,000 new shares. The initial price was $18.00/share with investment bankers retaining $1.26 as fees. The final first-day closing price was $23.50. 1. What were the total proceeds from this offering