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Within 3 Years The Company Was Generating Revenues

Submitted by • December 18, 2018

Details- 1) Within 3 years the company was generating revenues of $3. 4 million a year. 2)The company's entire equity capital was 1. 5 million shares owned by the three owners. 3) The initial public offering involved the sale of 500,000 shares by the 3 existing holders with the sale of 750,000 shares by the company. 4)The company estimated that the issue would cost a total of $1. 3 mil(expenses). 4) Entire issue could be sold at a price of $24 a share. Underwriters thought this was being greedy. Underwriters suggested $18 a share. Questions: 1)Would Mutt. com prefer a low stock price? Would that make the issue less costly?Questions: +++Suppose the underwriter purchased the stocks from the issuer at $15 per share and sold to public at $18. What would have been the total cost of underwriting assuming other expense, legal, auditing, and distribution costs was $1. 3 million? What would have been total cost as a percentage the market value if investors valued the stock at $20 per share?

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Voted by Simon Brooke

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