Indigo Inc. is going public and issuing 150,000 shares of common stock. The capital raised in...

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Indigo Inc. is going public and issuing 150,000 shares of common stock. The capital raised in the IPO will fund the companys proposed expansion. A Dutch auction is used to allocate shares in the Indigo IPO. The following table shows the number of shares requested by potential investors in each row. Number of Shares Price per Bids Bidder # 1 Bidder # 2 Bidder # 3 Bidder # 4 Bidder # 5 Bidder # 6 Requested 50,000 100,000 150,000 200,000 250,000 300,000 Share $65 $63 $61 $59 $57 $55 What should be the firms IPO offer price? O $61 O $54 O $56 O $57 O $63

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Answer 1

Answer #1

First Bid price of the Indigo inc. is $ 65 but at this price total number of shares possible to issue is only 50,000 shares. So at this price issue is not possible

Second Bid price of the Indigo inc. is $ 63 but at this price total number of shares possible to issue is only 100,000 shares.

But at the price of $ 63 indigo inc. can cover all 150,000 shares. It is because total bidding at$ 63 is 100,000 Shares and at $ 65 is 50,000 Shares.

If Indigo inc. can issue shares at $ 63 than his all available shares will cover in this.

So, Answer = Option 5 = $ 63

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Answer 2

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Indigo Inc. is going public and issuing 150,000 shares of common stock. The capital raised in...

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