Question

ABC Ltd, a high-technology company, issues a $23 million IPO with an offer price of $4...

ABC Ltd, a high-technology company, issues a $23 million IPO with an offer price of $4 per share, underwritten at $3.76 per share. The company's legal fees, ASIC registration fees, and other administrative costs are $446,000. The company's share price increases by $0.6 on the first day. What is the company's total cost of issuing the securities (in millions of dollars to three decimal places; don’t use $ sign eg $4.5766 million is 4.577)? (Remember to round the number of shares issued to a whole number)

Homework Answers

Answer #1

Total number of shares O/s = $23,000,000 / $4.0 per share = 5,570,000 shares

Total underwriting cost = 5,750,000 x ($4.00 - $3.76) = $1,380,000

Company's legal fees, ASIC registration fees, and other administrative costs = $446,000

The Loss due to company's share price increase = 5,750,000 x $0.60 = $3,450,000

Therefore, the company's total cost of issuing the securities = company's total cost of issuing the securities + legal fees, ASIC registration fees, and other administrative costs + Loss due to company's share price increase

= $1,380,000 + $446,000 + $3,450,000

= $5,276,000

= $5.276 Million (in millions of dollars to three decimal places)

The company's total cost of issuing the securities will be $5.276 Million

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
ABC Ltd, a high-technology company, issues a $26 million IPO with an offer price of $3...
ABC Ltd, a high-technology company, issues a $26 million IPO with an offer price of $3 per share, underwritten at $2.82 per share. The company's legal fees, ASIC registration fees, and other administrative costs are $487,000. The company's share price increases by $0.45 on the first day. What is the company's total cost of issuing the securities (in millions of dollars to three decimal places; don’t use $ sign eg $4.5766 million is 4.577)? (Remember to round the number of...
ABC Ltd, a high-technology company, issues a $29 million IPO with an offer price of $3...
ABC Ltd, a high-technology company, issues a $29 million IPO with an offer price of $3 per share, underwritten at $2.82 per share. The company's legal fees, ASIC registration fees, and other administrative costs are $467,000. The company's share price increases by $0.45 on the first day. What is the company's total cost of issuing the securities (in millions of dollars to three decimal places; don’t use $ sign eg $4.5766 million is 4.577)? (Remember to round the number of...
1. ABC Ltd, a high-technology company, issues a $23 million IPO with an offer price of...
1. ABC Ltd, a high-technology company, issues a $23 million IPO with an offer price of $3 per share, underwritten at $2.82 per share. The company's legal fees, ASIC registration fees, and other administrative costs are $380,000. The company's share price increases by $0.45 on the first day. What is the company's total cost of issuing the securities (in millions of dollars to three decimal places; don’t use $ sign eg $4.5766 million is 4.577)? (Remember to round the number...
ABC Ltd, a high-technology company, issues a $15 million IPO with an offer price of $1.50...
ABC Ltd, a high-technology company, issues a $15 million IPO with an offer price of $1.50 per share, underwritten at $1.40 per share. The company's legal fees, ASIC registration fees, and other administrative costs are $279,000. The company's share price increases by $0.1 on the first day. What is the company's total cost of issuing the securities? In millions ( round the number of shares issued to a whole number)
ABC Ltd issues a $18 million IPO providing proceeds to ABC of $2.7 per share, from...
ABC Ltd issues a $18 million IPO providing proceeds to ABC of $2.7 per share, from an offer price to the public of $3 per share. The company's legal fees, ASIC registration fees, and other administrative costs are $471,000. The company's share price increases 15 per cent on the first day. What is the underpricing cost to the company of issuing the securities? (in millions of dollars to the nearest three decimal places; don’t use the $ sign eg 7.897)?
ABC Ltd., a technology company, issues a $15 million IPO providing proceeds to ABC of $2.7...
ABC Ltd., a technology company, issues a $15 million IPO providing proceeds to ABC of $2.7 per share, from an offer price to the public of $3 per share. The company's legal fees, ASIC registration fees, and other administrative costs are $377,000. The company's share price increases 14 per cent on the first day. What is the total cost to the issuer of the IPO (in millions of dollars to the nearest three decimal places; don’t use the $ sign...
ABC Ltd., a technology company, issues a $24 million IPO providing proceeds to ABC of $3.6...
ABC Ltd., a technology company, issues a $24 million IPO providing proceeds to ABC of $3.6 per share, from an offer price to the public of $4 per share. The company's legal fees, ASIC registration fees, and other administrative costs are $456,000. The company's share price increases 14 per cent on the first day. What is the total cost to the issuer of the IPO (in millions of dollars to the nearest three decimal places; don’t use the $ sign...
ABC Ltd., a technology company, issues a $47.2 million IPO providing proceeds to ABC of $5.31...
ABC Ltd., a technology company, issues a $47.2 million IPO providing proceeds to ABC of $5.31 per share, from an offer price to the public of $5.9 per share. The company's legal fees, ASIC registration fees, and other administrative costs are $164,000. The company's share price increases 5.6 per cent on the first day. What is the total amount of the underwriter’s spread (in millions of dollars to the nearest three decimal places; don’t use the $ sign eg 7.897)?
b) A company makes an initial public offering of shares to raise $220 million, at an...
b) A company makes an initial public offering of shares to raise $220 million, at an offer price of $5.30 per share. The issue is underwritten at $5.00. The costs of preparing the prospectus, legal fees, ASIC registration and other administrative costs add up to $800,000. If the firms’ share price closes at $6.40 on its first day of trade. What is the total cost of the IPO?
A company issues a $200 million IPO. The offer price is $5 per share. The underwriter’s...
A company issues a $200 million IPO. The offer price is $5 per share. The underwriter’s spread is 8%. The underwriter has agreed to a stand-by arrangement. For issuing the IPO, the company will pay some admin costs. The admin costs include a legal fee of $50,000, an accountant fee of $30,000 and other admin costs amounting to $170,000. The company’s share price increases by 10% at the end of the first day of trading. However, the offer has not...