An online medical advice company just completed an IPO with an investment bank o

Question

An online medical advice company just completed an IPO with an investment bank on a firm-commitment basis. The firm issued 5 million shares of common stock, and the underwriting fees were $4.60 per share. The offering price was $25.30 per share.

What were the total proceeds from the common-stock sale? (Round answer to nearest whole dollar, e.g. 5,275.)

How much money did the company receive? (Round answer to nearest whole dollar, e.g. 5,275.)

How much money did the investment bank make? (Round answer to nearest whole dollar, e.g. 5,275.)

Explanation / Answer

Hi,

Please find the detailed answer as follows:

Total Proceeds = 5000000*25.30 = 126500000

Net Proceeds = 5000000*(25.30 - 4.60) = 103500000

Underwriting Spread = 5000000*4.60 = 23000000

Thanks.

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