Bethesda Biosys issues an IPO on a best-effort basis. The company's investment bank demands a spread of 18 percent of the selling price. The average selling price remains at $25 per share. Four million shares are issued. What are the net proceeds for the issuer?

Question

Quizplus · Accepted Answer

The gross proceeds from the IPO are 4 million shares * $25 = $100 million. The investment bank takes an 18% spread, which is $18 million (0.18 * $100 million). Therefore, the net proceeds for the issuer are $100 million - $18 million = $82 million.

Bethesda Biosys Issues an IPO on a Best-Effort Basis