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8 October, 02:01

Nelson Paints recently went public by offering 50,000 shares of common stock to the public. The underwriters provided their services in a best efforts underwriting. The offering price was set at $17.50 a share and the gross spread was $2.30. After completing their sales efforts, the underwriters determined that they sold a total of 47,500 shares. How much cash did the company receive from its IPO?

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  1. 8 October, 02:27
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    cash received $722,000

    Explanation:

    amount received per share:

    17.5 per share

    - 2.3 gross spread

    15.2 per share

    47,500 shares x $15.2 per share = 722,000 total proceeds

    Gross spread: will be the fee of the inderwriters forthe IPO it decrease the amount collected from the issuing company.
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