Your company is going for IPO issue. You are also sure that you will receive subscription for minimum of 90% shares so chances of IPO not being subscribed is minimal. You may use the fixed price method or book building process to decide IPO pricing. You may assume subscription schedule starting from minimum 90% of share for different price. Based on the following information, compare both book building and fixed price method and state which one you will choose. Base Price $100, Amount to be raised $6,000,000, Maximum Number of shares that can be issued 60000. Also, clearly state assumptions (if any) to support your solution.

Your company is going for IPO issue. You are also sure that you will receive subscription for minimum of 90% shares so chances of IPO not being subscribed is minimal. You may use the fixed price method or book building process to decide IPO pricing. You may assume subscription schedule starting from minimum 90% of share for different price. Based on the following information, compare both book building and fixed price method and state which one you will choose. Base Price $100, Amount to be raised $6,000,000, Maximum Number of shares that can be issued 60000. Also, clearly state assumptions (if any) to support your solution.

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

ChapterMB: Model-building Problems

Section: Chapter Questions

Problem 11M

See similar textbooks

Similar questions

Please solve the problem max in 30-60 minutes. Please no reject thank u 2. The Charter Company currently owns preferred stock with dividends paid of IDR 1300. If it is estimated that the shares can be sold at a market price of IDR 8000. Determine the cost of preferred stock (KP).
An initial margin required is 48% and maintenance of 55%. An investor buys GPH 9500 shares of stock of margin at TK 95.55 per share. The price of the stock subsequently drops to TK 47.60. a. Find the amount investor has to deposit for initiating the transaction. b.What is the actual margin at tk 56.56 share price is the account restricted? c.Show the amount of margin call is required to bring back account into operational at price of tk.53.90?
You would like to sell 220 shares of Echo Global Logistics, Inc. (ECHO). The current ask and bid quotes are $15.44 and $15.39, respectively. You place a limit sell order at $15.43.If the trade executes, how much money do you receive from the buyer?
This is a complete question & solution is also attached just explain the calculations or rework it . Thanks Question : ABC Inc in considering a right offer . The company has considered that the Ex-right price would be the $52 . The current price is $55 per share & there are 5 Million shares outstanding .The right offer would raise a total of $60 Million .What is the subscription price? Solution : Attached Below
Kiser Mfg. is considering a rights offer. The company has determined that the ex-rights price will be $78. The current price is $100 per share, and there are 25 million shares outstanding. The rights offer would raise a total of $50 million. What is the subscription price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Subscription price
ABC has 1 million shares outstanding, each of which has a price of $24. It has made a takeover offer of XYZ Corporation which has 1 million shares outstanding, and a price per share of $2.39. Assume that the takeover will occur with certainty and all market participants know this. Furthermore, there are no synergies to merging the two firms. a. Assume ABC made a cash offer to purchase XYZ for $5.04 million. What happens to the price of ABC and XYZ on the announcement? What premium over the current market price does this offer represent? b. Assume ABC makes a stock offer with an exchange ratio of 0.21. What happens to the price of ABC and XYZ this time? What premium over the current market price does this offer represent? c. At current market prices, both offers are offers to purchase XYZ for $5.04 million. Does that mean that your answers to parts (a) and (b) must be identical? Explain. a. Assume ABC made a cash offer to purchase XYZ for $5.04 million. What happens to the price of ABC…
You purchase 500 shares of Compucon for $120 per share using a margin account. This transaction requires a 45% percent margin. a. What is the initial margin position? b. Assume the price of Compucon declines to $90 per share. If the minimum maintenance margin requirement is 25% will you receive a margin call? Why? Why not? Explain. c. What is your rate of return? d. Calculate the price that will trigger a margin call.
Solve the following problem with complete solution.1. List five large publicly held companies that you know or whose products and services you enjoy. Then use the web to find the most recent closing stock price. Ignoring commissions, estimate the cost if you purchased ten shares of each of the five companies.
a. An initial margin requirement is 54% and maintenance margin of 48%. An investor buys GPH, 9500 shares of stock on margin at Tk. 86.50 per share. The price of the stock subsequently drops to tk. 55.70. a. Find the amount investor has to deposit for initiating the transaction. b. What is the actual margin at tk. 54.25 share price is the account restricted? c. If the price rises to tk. 61.90, is there a margin call? d. Show the amount of margin call is required to bring back account into operational at price of tk. 63.10?
NEED ASAP. Solve correctly and show your computations. FPJ Inc. received subscription for 5,250 Preference Shares at P 10 above par value of P 200 per share. After a down payment of P 125 per share from all the subscribers, how much is the balance of the Subscription Receivable?
The analysis that we have to provide is as follows: Review the specifics of the IPO, including underwriting spread and other expenses. Consider the concept of underpricing and a higher than normal first day spike in stock price. What does this mean for the issuing company? What does this mean for the underwriter? The Mini Case we have to go off of is: Mutt.Com was founded in 2015 by two graduates of the University of Wisconsin with help from Georgina Sloberg, who had built up an enviable reputation for backing new start-up businesses. Mutt.Com's user-friendly system was designed to find buyers for unwanted pets. Within 3 years, the company was generating revenues of $3.4 million a year and, despite racking up sizable losses, was regarded by investors as one of the hottest new e-commerce businesses. Therefore, the news that the company was preparing to go public generated considerable excitement. The company's entire equity capital of 1.5 million shares was owned by the two founders…
Safari Ltd is a tour and travel company that wants to expand its business by opening a new branch in Nakuru . The finance manager has advised the CEO to consider an issue of 8% irredeemable preference shares whose par value is Sh 80 at an issue price of Sh76. What is the cost of this preference shares ?