Question

Roundtree Software is going public using an auction IPO. The firm has received the following bids: Price ($) Number of Shares 14.40 120,000 14.20 220,000 540,000 14.00 1,000,000 13.80 13.60 1,300,000 13.40 860,000 13.20 400,000 Roundtree had previously believed it would issue 1,900,000 shares; however, if Roundtree decides to issue an extra 456,000 shares (for a total of 2,356,000 shares), how much total money will it raise? total amount of Smillion. (Round to one decimal place.) Roundtree will raise

Answer 1

Price($)	Number of shares demanded	Cumulative nos. of shares demanded
14.40	120,000	120,000
14.20	220,000	340,000
14.00	540,000	880,000
13.80	1,000,000	1,880,000
13.60	1,300,000	3,180,000
13.40	860,000	4,040,000
13.20	400,0000	4,440,000

The winning price should be $13.60, because investors have placed orders for a total of 2,356,000 shares at a price of $13.60 or higher.

Total Amount Raised = Price * Shares Issued = $13.60 * 2.356 million = $32.04 million