In a recent IPO, the Sausage Co. offered 1.6 million shares of stock at an offer price of $18 a share. The underwriting was conducted on a best efforts basis with a spread of 7.0 percent. The Sausage Co. received a total of $25,079,868.00 in sale proceeds. How many shares were sold?

Question

Quizplus · Accepted Answer

The total proceeds received by Sausage Co. is $25,079,868.00. The offer price per share is $18, and the underwriting spread is 7%, meaning Sausage Co. receives 93% of the offer price per share. Thus, the effective price per share received by Sausage Co. is $18 * 0.93 = $16.74. Dividing the total proceeds by the effective price per share gives the number of shares sold: $25,079,868.00 / $16.74 ≈ 1,498,200 shares.

In a Recent IPO, the Sausage Co