What are the firms total costs for the ipo


Problem: A firm is planning an IPO. The underwriters say stock will sell at $20. The direct costs will be $800,000 and underwriters will charge a 7% spread.

(a) How many shares must be sold to net $30 million.

(b) If the stock price closes on day one at $22. per share how much will the firm have left on the table?

(c) What are the firms total costs for the IPO?

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Finance Basics: What are the firms total costs for the ipo
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