In its IPO, Jillian's Imprints, a small publishing house, offered shares at a price of $8.00 per share. The underwriters of this IPO had a spread of 6.5% per share. If 2 million shares were sold, what funds did Jillian's Imprints receive from the IPO?

Question

Quizplus · Accepted Answer

The spread is 6.5% of the offering price, which is $8.00 per share. Therefore, the underwriters received $0.52 ($8.00 x 0.065) per share.

The net proceeds per share for Jillian's Imprints is $7.48 ($8.00 - $0.52).

If 2 million shares were sold, then the total funds Jillian's Imprints would receive is:
$7.48 x 2,000,000 = $14,960,000 or $14.96 million.

Therefore, the correct answer is B.

In Its IPO, Jillian's Imprints, a Small Publishing House, Offered