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

First, we need to calculate the total amount of money raised from the sale of shares:

Total amount raised = number of shares sold x price per share
Total amount raised = 2,000,000 x $8.00
Total amount raised = $16,000,000

Next, we need to calculate the underwriters' spread:

Underwriters' spread = 6.5% x price per share
Underwriters' spread = 0.065 x $8.00
Underwriters' spread = $0.52 per share

Finally, we can calculate the funds that Jillian's Imprints received from the IPO by subtracting the underwriters' spread from the total amount raised:

Funds received by Jillian's Imprints = Total amount raised - Underwriters' spread per share x number of shares sold
Funds received by Jillian's Imprints = $16,000,000 - $0.52 x 2,000,000
Funds received by Jillian's Imprints = $14,960,000

Therefore, the answer is B, $14.96 million.

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