Pickswinners Venture Fund
Pickswinners Venture Fund invested $10 million five years ago in Robotronics Co. The fund received 6 million shares of convertible preferred stock, each of which can be converted into three shares of common stock. Robotronic is now set to complete an IPO, and its shares are being priced at $40 each. Pickswinners will convert its preferred stock to common at the IPO, and will sell its shares along with Robotronic. The investment banking firm handling the IPO will charge an 8% underwriting fee

-What proceeds does Pickswinners expect to receive?

Question

Pickswinners Venture Fund
Pickswinners Venture Fund invested $10 million five years ago in Robotronics Co. The fund received 6 million shares of convertible preferred stock, each of which can be converted into three shares of common stock. Robotronic is now set to complete an IPO, and its shares are being priced at $40 each. Pickswinners will convert its preferred stock to common at the IPO, and will sell its shares along with Robotronic. The investment banking firm handling the IPO will charge an 8% underwriting fee

-What proceeds does Pickswinners expect to receive?

Quizplus · Accepted Answer

Pickswinners will receive 6 million shares of common stock (6 million shares of preferred stock * 3 shares of common stock per preferred share). After converting its preferred stock to common stock, Pickswinners will sell its shares along with Robotronics. The investment banking firm handling the IPO will charge an 8% underwriting fee. Therefore, Pickswinners will receive proceeds of $720,000,000 (6 million shares * $40 per share * (1 - 8% underwriting fee)).

Pickswinners Venture Fund Pickswinners Venture Fund Invested $10 Million Five Years Ago in Years