Bavarian Brewhouse is planning an IPO. Under the terms of the IPO, Bavarian Brewhouse will issue 8 million shares at an offer price of $25 per share. The underwriter charges are 9% underwriting fee and direct costs are estimated to be $7 million. The stock is expected to trade at $30 at the end of the first trading day.What are the total costs caused by underpricing?

Answer rating: 100% (QA)

To calculate the total costs caused by underpricing we need to ... View the full answer