Unit 6 - Homework.xlsx

Unit 6 - Homework.xlsx - Problem 11-1 West Coast...

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Problem 11-1 a. Calculate the initial return earned by investors who are allocated shares in the IP Expected Sell Price - Offer Price = 32 - 25 = b. How much will WCMC receive from this offering? IPO = Offer Price x = 25 x Underwriting Fee = 1.75 x IPO - Underwriting Fee 250,000,000 - 17,500,000 c. What is the total cost (underwriting fee and underpricing) of this issue to WCMC Underwriting Fee 250,000,000 x Underpricing 7 x UnderWriting Fee and Underpricing 17,500,000 + West Coast Manufacturing Company (WCMC) is executing an initial public offering with the underwriter will charge a 7% underwriting fee, and the shares are expected to sell for $32
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PO. Return 7 or 28.00% Shares 10,000,000 = 250,000,000 10,000,000 = 17,500,000 = Return = 232,500,000 C? 7% = 17,500,000 10,000,000 = 70,000,000 70,000,000 = 87,500,000 e following characteristics. The Company will sell 10 million shares at an offer price of $25 per s per share by the end of the first day’s trading. Assume that this IPO is executed as anticipated.
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Shares Price Fee Sell 10,000,000 25 7% 32 share, the
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Problem 11-2 IPO = 32 Per Share Selling Price = 35 Per Share Stock Market = 11% Selling Price - IPO = ROI 35 - 32 = 3 or 9.375% My ROI was 1.625% lower than the overall stock market for the year so it was not a g Suppose you purchase shares of Englel, Inc (EI), which recently executed an IPO at the post-of You then sell your EI shares for $35 per share. EI does not pay dividends, and you are not subje
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  • Fall '08
  • TAVBIN

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