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

Question

Quizplus · Accepted Answer

The total amount raised by the IPO would be:
$25 per share x 4 million shares = $100 million

The investment bank's spread is 18% of the selling price, which is:
0.18 x $25 = $4.50 per share

Therefore, the issuer would receive:
$25 - $4.50 = $20.50 per share

The net proceeds for the issuer would be:
$20.50 per share x 4 million shares = $82 million.

Bethesda Biosys Issues an IPO on a Best-Efforts Basis