5. IPO stock valuation Suppose St. McCluskey Beer Co. is going public and, based on...
70.2K
Verified Solution
Link Copied!
Question
Finance
5. IPO stock valuation
Suppose St. McCluskey Beer Co. is going public and, based on the bookbuilding process, decides it will be issuing 750,000 shares of common stock to raise capital to fund the companys proposed expansion. Suppose a Dutch auction (an auction in which the auctioneer begins with a high asking price and lowers it until some bidder accepts the price) is used to allocate shares in the St. McCluskey Beer Co. IPO. The following table shows the number of shares requested by potential bidders.
Bids
Number of Shares Requested
Price per Share
Bidder 1
50,000
$64
Bidder 2
100,000
$56
Bidder 3
150,000
$52
Bidder 4
200,000
$47
Bidder 5
250,000
$41
Bidder 6
300,000
$36
To sell the 750,000 shares, St. McCluskey Beer Co.s IPO minimum offer price should be
.The total amount of funding raised will be
.
Given the typical 7 percent transaction cost due to the issuing firm, the IPO would result in a transaction cost of
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
