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

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

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter15: Dividend Policy

Section: Chapter Questions

Problem 12P

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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

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