Question

Initial public offering On April 13, 2017, Yext Inc. completed its IPO on the NYSE. Yext sold 10,500,000 shares of stock at an offer price of $11 with an underwriting discount of $0.77 per share. Yext’s closing stock price on the first day of trading on the secondary market was $13.41, and 85,489,470 shares were outstanding.

A: Calculate the total proceeds for Yext’s IPO.

B: Calculate the percentage underwriter discount.

C: Calculate the dollar amount of the underwriting fee for Yext’s IPO.

D: Calculate the net proceeds for Yext’s IPO.

E: Calculate Yext’s IPO underpricing.

F: Calculate Yext’s market capitalization.

Please show your steps, this is confusing to me, thanks in advance! :)

Answer 1

A. Total proceeds=shares sold*offer price=10,500,000*$11=$115,500,000

B. Underwriting discount percentage=underwriting discount/offer price=0.77/11=0.07 that is 7%

C. Underwriting fee=shares sold*underwriting price=10,500,000*$0.77=$80,85,000

D. Net proceeds=shares sold*(offer price-underwriting discount)=10,500,000*$(11-0.77)

=$10,500,000*$10.23

=$107,415,000

E. IPO Underpricing=(Initial trading price-offer price)*number of shares

=$(13.41-11)*10,500,000

=$2.41*10,500,000

=$25,305,000

F. Market capitalization=trading price*number of outstanding shares

=$13.41*85,489,470

=$1,146,413,792.70