Question

The problem requires you to use File CO3 on the computer problem spreadsheet. Diction Publishing estimates that it needs $500,000 to support its expected growth. The underwriting fees charged by the investment banking firm for which you work are 65% for such issue sizes. In addition, it is estimated that Diction will incur $4,900 in other expenses related to the IPO. a. If your analysis indicates that Diction's stock can be sold for $40 per share, how many shares must be issued to net the company the $500,000 it needs? Net 500,000, Gross- (500,000+4,900)/1-0.065) S40,000 540,000/40-13500 shares Suppose that Diction's investment banker charges 10% rather than 6.5%. Assuming-that all other information given earlier is the same, how many shares must Diction issue in this situation to net the company the $500,000 it needs? b. Net 500,000, Gross= (500,000+4,900) (1-01)-561000 .

Please help with E, F

Answer 1

Floation cost Other expenses Net funds required Gross funds required Share price No of shares to be issued 4 3840 485608.8 12141 10 Floation cost Other expenses Net funds required Gross funds required Share price No of shares to be issued 12 13 3840 485608.8 32 15176 16 I 18 19 20 21

Floation cost Other expenses Net funds required Gross funds required Share price No of shares to be issued 0.07 4 (D5+D4)*(1+D3) ROUNDUP(D6/D7,0) 10 Floation cost Other expenses Net funds required Gross funds required Share price No of shares to be issued 12 13 0.07 15 16 (D14+D13)*(1+D12) 32 ROUNDUP(D15/D16,0) 18 19 20 21