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 2.9 million shares of stock. The underwriter used a firm commitment offering in which the net proceeds were $7.98 per share and the underwriter’s spread was 5 percent of the gross proceeds. Zimba also paid legal and other administrative costs of $254,000 for the IPO.

Calculate the gross proceeds per share. (Round your answer to 2 decimal places.)

$7.98 *(1-.05) = 8.40

Calculate the total funds received by Zimba from the sale of the 2.9 million shares of stock. (Enter your answer in millions of dollars rounded to 3 decimal places.)

Zimba Technology Corp. recently went public with an initial public offering of 2.9 million shares of stock. The underwriter used a firm commitment offering in which the net proceeds were $7.98 per share and the underwriter’s spread was 5 percent of the gross proceeds. Zimba also paid legal and other administrative costs of $254,000 for the IPO.

Explanation / Answer

Answer:

Total Funds Received by the Zimba Corporation = Amount received from issuance - Expenses made related to issuance
Total Funds Received by the Zimba Corporation = (2.9 Millions * $7.98) - $0.254
Total Funds Received by the Zimba Corporation = $23.142 - $0.254
Total Funds Received by the Zimba Corporation = $22.888

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