Problem:
A company is planning to go public. Currently, the pre-IPO value of the firm's equity is $95 million, the number of outstanding shares is 3.5 million, the company need to raise $17 million, and the floatation cost of new equity is 12%.
Required:
Question 1: Calculate the gross proceeds needed from an IPO given the following information.
Question 2: What is the post-IPO equity value?
Question 3: What is the offer price?
Note: Provide support for your rationale.