Question: Moonscape has just completed an initial public offering. The firm sold 3 million shares at an offer price of $8 per share. The underwriting spread

Moonscape has just completed an initial public offering. The firm sold 3 million shares at an offer price of $8 per share. The underwriting spread was $.50 a share. The price of the stock closed at $12 per share at the end of the first day of trading. The firm incurred $100,000 in legal, administrative, and other costs.

a. What were flotation costs as a fraction of funds raised?

b. Were flotation costs for Moonscape higher or lower than is typical for IPOs of this size (Figure 15.1)?

Moonscape has just completed an initial public offering. The firm

10 IPOs Convertibles I SEOs Bonds Proceeds (S millions)

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