Question: 1.You have started a company and a venture capitalist has offered to invest. You own 100% of the company with 5,682,689 shares. The VC offers

1.You have started a company and a venture capitalist has offered to invest. You own 100% of the company with 5,682,689 shares. The VC offers $1,725,402 for 1,343,712 new shares.

What fraction of the firm will you own after the investment?

2.Company A is going public using an auction IPO. The firm has received the following bids

Price ($) Number of Shares
14.00 100,000
13.80 200,000
13.60 500,000
13.40 1,000,000
13.20 1,200,000
13.00 800,000
12.80 400,000

The company wants to sell 1.8 million shares in its IPO, what will be the winning auction offer price?

3.Company A currently has 9,718,006 shares of stock outstanding at a price of $35 per share. The company would like to raise money and has announced a rights issue. Every existing shareholder will be sent one right per share of stock that he or she owns. The company plans to require 12 rights to purchase one share at a price of $35 per share. How much money will it raise if all rights are exercised?

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