Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
4th Edition
ISBN: 9780134083278
Author: Jonathan Berk, Peter DeMarzo
Publisher: PEARSON
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Question
Chapter 23, Problem 18P
a.
Summary Introduction
To determine: The money raised by MP Incorporation.
Introduction: When a company sells its share publically in an open market for the first time, it is known as initial public offering (IPO).
b.
Summary Introduction
To determine: The money received by the venture capitalist.
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Students have asked these similar questions
On January 20, Metropolitan Inc. sold 9 million shares of stock in an SEO. The market price of Metropolitan at the time was $41.25 per share. Of the 9 million shares sold, 4 million shares were
primary shares being sold by the company, and the remaining 5 million shares were being sold by the venture capital investors. Assume the underwriter charges 5.3% of the gross proceeds as an
underwriting fee.
a. How much money did Metropolitan raise?
b. How much money did the venture capitalists receive?
c. If the stock price dropped 2.7% on the announcement of the SEO and the new shares were sold at that price, how much money would Metropolitan receive?
a. How much money did Metropolitan raise?
After underwriting fees, Metropolitan raised $
million. (Round to two decimal places.)
On December 4, 20X0, ABC Corporation paid P1,296,000 for 40,000 ordinary shares of XYZ Company. The investment represents a 30% interest in the net assets of XYZ and gave ABC the ability to exercise significant influence over XYZ’s operating and financial policy decisions. ABC received dividends of P1 per share on December 4, 20X0, and XYZ reported net income of P640,000 for the year ended December 31, 20X0. The market value of XYZ’s ordinary shares at December 31, 20X0, was P32 per share. The book value of XYZ’s net assets was P3,200,000, and: • The fair value of XYZ’s depreciable assets, with an average remaining useful life of 8 years, exceeded their book value by P320,000. • The remainder of the excess of the cost of the investment over the book value of net assets purchased was attributable to goodwill. What amount of investment revenue should be reported in ABC’s income statement for the year ended December 31, 20X0?
On January 20,
Sullivan
Inc., sold
10
million shares of stock in an SEO. The market price of
Sullivan
at the time was
$40.25
per share. Of the
10
million shares sold,
4
million shares were primary shares being sold by the company, and the remaining
6
million shares were being sold by the venture capital investors. Assume the underwriter charges
4.5%
of the gross proceeds as an underwriting fee.
a. How much money did
Sullivan
raise?
b. How much money did the venture capitalists receive?
c. If the stock price dropped
2.7%
on the announcement of the SEO and the new shares were sold at that price, how much money would
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Chapter 23 Solutions
Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
Ch. 23.1 - Prob. 1CCCh. 23.1 - Prob. 2CCCh. 23.2 - Prob. 1CCCh. 23.2 - Prob. 2CCCh. 23.3 - List and discuss four characteristics about IPOs...Ch. 23.3 - Prob. 2CCCh. 23.4 - Prob. 1CCCh. 23.4 - What is the average stock price reaction to an...Ch. 23 - Prob. 1PCh. 23 - What are the advantages and the disadvantages to a...
Ch. 23 - Prob. 3PCh. 23 - Suppose venture capital firm GSB partners raised...Ch. 23 - Prob. 5PCh. 23 - Prob. 6PCh. 23 - Prob. 7PCh. 23 - Prob. 8PCh. 23 - Prob. 9PCh. 23 - Prob. 10PCh. 23 - Prob. 11PCh. 23 - Prob. 12PCh. 23 - What is IPO underpricing? If you decide to try to...Ch. 23 - Prob. 14PCh. 23 - Prob. 15PCh. 23 - Prob. 16PCh. 23 - Prob. 17PCh. 23 - Prob. 18PCh. 23 - Prob. 19PCh. 23 - Prob. 20P
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