Question

# Zimba Technology Corp. recently went public with an initial public offering of 1.9 million shares of...

 Zimba Technology Corp. recently went public with an initial public offering of 1.9 million shares of stock. The underwriter used a firm commitment offering in which the net proceeds were \$7.60 per share and the underwriter’s spread was 5 percent of the gross proceeds. Zimba also paid legal and other administrative costs of \$264,000 for the IPO.
 Calculate the gross proceeds per share. (Round your answer to 2 decimal places.)
 Gross proceeds \$  per share
 Calculate the total funds received by Zimba from the sale of the 1.9 million shares of stock. (Enter your answer in millions of dollars rounded to 3 decimal places.)
 Funds received by Zimba \$  m

Gross Proceeds per share = \$8.00 per share

Gross Proceeds per share

Gross proceeds = Underwriters spread + Net Proceeds

Gross proceeds = [ 0.05 x Gross proceeds ] + \$7.60

Gross proceeds – 0.05 Gross Proceeds = \$7.60

0.95 Gross Proceeds = \$7.60

Gross proceeds = \$7.60 / 0.95 = \$8.00 per share

Total funds received by Zimba Technology Corp=

Total funds received by Zimba Technology Corp

= [ Number of shares x net proceeds per share ] - Legal and other administrative expenses

= [1.9 million shares x \$7.60 per share ] - \$0.264 million

= \$14.44 million - \$0.264 million

= \$14.176 million

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