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​A Brazilian company called Netshoes completed its IPO on April 12, 2017, and listed on the NYSE. Netshoes sold 8,250,000 shares of stock to primary market investors at an IPO price of $17.36, with an underwriting discount of 6.6?%. Secondary market? investors, however, were paying only $15.95 per share for Netshoes' 31,025,936 shares of stock outstanding

(a) Calculate the total proceeds for? Netshoes' IPO.
(b) Calculate the dollar amount of the underwriting fee for? Netshhoes' IPO.
(c) Calculate the net proceeds for? Netshoes' IPO.

2 Answers

4 votes

Answer:

(a) $143,220,000

(b) $9,452,520

(c) $ 133,767,480

Step-by-step explanation:

IPO- stands for initial public offering. It occurs when a private company wants to sell its shares to the public by listing on an exchange platform

Primary market- initial market where shares of a private company are sold to the public for the first time

Secondary market- this is a market where investors can buy and sell these shares based on perceived information so as to make profits

Underwriter- a third party which in this case, sells the shares on behalf of the private company during an IPO

Underwriting discount- cost of the underwriting service described above

Given the above definitions, the total proceeds for Netshoes' IPO (price * quantity of shares sold during IPO) is $143,220,000. The commission paid (for costs incurred to sell shares) by Netshoes to the underwriters is $9,452,520 and the net proceeds for Netshoes' IPO (total proceeds less commission) is $ 133,767,480.

User Akalanka
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4 votes

Answer:

(A) $143,220,000

(B) $9,452,520

(C) $133,767,480

Step-by-step explanation:

(a) The computation of the total proceed is shown below:

= Number of shares sold at IPO × IPO price

= 8,250,000 shares × $17.36

= $143,220,000

(b) The computation of the dollar amount of the underwriting fee is shown below:

= Total proceeds × underwriting discount

= $143,220,000 × 6.6%

= $9,452,520

(c) The computation of the net proceeds is shown below:

= Total proceeds - underwriting fee

= $143,220,000 - $9,452,520

= $133,767,480

User Simon Hellinger
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4.7k points