Question

The management of X Winery is planning an IPO of 8 million shares, 75% of which are primary shares and 25% of which are secondary shares. If the shares are priced at $32 and the underwriter charges 5% of gross proceeds, what will be the total proceeds that company receives from the issuance

Answer 1

$182,000,000

Step-by-step explanation:

In this question, we are trying to calculate the amount of money that a company will make from the issuance of some shares.

We should kindly note that it is the primary share profits/proceeds that go into the company.

Hence, the number of shares issued will be; 75% * 8,000,000 = 6,000,000

Now, the share price after underwriting fees would be 32 * 95% = $30.40

Thus, the share proceeds would be 6,000,000 * $30.40 = $182,000,000