Zimba Technology Corp. recently went public with an initial public offering of 2

Question

Zimba Technology Corp. recently went public with an initial public offering of 2.1 million shares of stock. The underwriter used a firm commitment offering in which the net proceeds were $8.16 per share and the underwriter’s spread was 4 percent of the gross proceeds. Zimba also paid legal and other administrative costs of $266,000 for the IPO. Calculate the gross proceeds per share. (Round your answer to 2 decimal places.) Gross proceeds $ per share Calculate the total funds received by Zimba from the sale of the 2.1 million shares of stock. (Enter your answer in millions of dollars rounded to 3 decimal places.) Funds received by Zimba $ m

Explanation / Answer

Net funds received by Zimba:

= $17,136,000-$266,000

= $16,870,000

Proceeds received by Zimba $ 17,136,000 8.16*2100000 Add: Underwriter's margin $        714,000 8.16*2100000*4%/(1-4%) Total gross proceeds $ 17,850,000 Gross proceeds per share $               8.50 17850000/2100000 Funds received by Zimba $ 17,136,000 8.16*2100000

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