Hughes Technology Corp. recently went public with an initial public offering in which they received a total of $9 million in new capital funding. The underwriter used a firm commitment offering in which the offer price was $102 and the underwriter's spread was $1.35. Hughes Technology also paid legal and other administrative costs of $400,000 for the IPO. Calculate the number of shares issued through this IPO.
A) 93,393
B) 92,157
C) 89,419
D) 88,235

Question

Quizplus · Accepted Answer

The number of shares issued can be calculated as follows:Number of shares = Total capital raised / (Offer price - Underwriter's spread)= $9,000,000 / ($102 - $1.35)= 93,393 shares