Question: 1 . Luna Pharmaceuticals is evaluating an IPO to raise $ 9 7 million net of flotation costs. Harvest has $ 3 5 million in

1 .

Luna Pharmaceuticals is evaluating an IPO to raise $

97

million net of flotation costs.

Harvest has $

35

million in debt, $

5

million in short

-

term investments and currently has

20

million shares of common stock owned entirely by its founding family.

After careful analysis of the firm

s free cash flow you have determined its value of operations is $

210

million.

The investment bank bringing the new shares to market charges a

6.77 %

underwriting spread.

.

In order for Luna to raise the capital it needs, what amount of gross proceeds are required?

.

What is the intrinsic stock value per share before the IPO? C

.

What is Luna Pharmaceuticals

estimated value of operations after the IPO?

.

What percentage of the total post IPO value will the new shareholders require? How many new shares will be sold in the IPO to provide the percentage ownership required by the new shareholders?

What will be the total number of shares outstanding after the IPO?

.

Based on the number of new shares sold in the IPO and the total amount paid by the new investors, what is the offer price of the IPO shares?

.

Based on the total value of the company after the IPO and the total number of shares outstanding after the IPO, what is the intrinsic price per share after the IPO?

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