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25. Calculating Costs of Issuing Stock TriState Corp. recently went public with an initial public offering...

25. Calculating Costs of Issuing Stock TriState Corp. recently went public with an initial public offering in which they received a total of $50.70 million in new capital funding. The underwriter used a firm commitment offering in which the offer price was $31.75 and the underwriter's spread was $2.20. TriState also paid legal and other administrative costs of $1,020,000 for the IPO. What is the number of shares issued through this IPO?

Multiple Choice

  • 1,750,254

  • 1,715,736

  • 1,596,850

  • 1,628,976

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Answer #1

Solution:

Offer price = $31.75

Underwriters spread = $2.20

Net proceeds = $31.75-$2.20= $29.55

Funds received + legal and other administrative expenses = $5,07,00,000+$10,20,000= $5,17,20,000

Number of shares issued = $5,17,20,000/$29.55= 1,750,254

Option a is correct I.e. 1,750,254

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