Your firm is selling 4 million shares in an IPO. You are targeting an offer price of
Question:
Your firm is selling 4 million shares in an IPO. You are targeting an offer price of
$16.83 per share. Your underwriters have proposed a spread of 5.6%, but you would like to lower it to 3.6%. However, you are concerned that if you do so, they will argue for a lower offer price. Given the potential savings from a lower spread, how much lower can the offer price go before you would have preferred to pay 5.6% to get $16.83 per share?
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Related Book For
Fundamentals Of Corporate Finance
ISBN: 9781292437156
5th Global Edition
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford
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