1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
STatiana [176]
3 years ago
6

Bethesda Biosys issues an IPO on a best-efforts basis. The company's investment bank requires a spread of 18 percent of the sell

ing price. The average selling price is expected to be $25 per share. Four million shares are issued. What are the net proceeds for the issuer?
Business
1 answer:
Andrej [43]3 years ago
4 0

Answer:

Bethesda Biosys

Issue of an IPO:

Net proceeds for the issuer is $82 million, if all the 4 million shares are bought by investors.

Explanation:

a) Calculations:

The spread is $4.5 (18% of $25) per share, since average selling price is $25.

Therefore, the net proceed per share is $20.50 ($25 - 4.50).

And the Total Net Proceeds = $82 million ($20.50 * 4 million), assuming that all four million shares were bought by the public.

Note that the question did not provide the necessary information to make the final decision.

b) During the issue of securities, especially an IPO, underwriters, such as investment banks, pay an issuing company for the securities and then sell the securities to the public.  There is always a difference per share price that they are willing to pay the issuer and what they will collect from the investing public.  That difference is called the underwriting spread or simply the spread.

c) Best-Efforts Basis: According to investopedia.com, underwriting on best-effort basis is "an agreement between an underwriter and an issuer in which the underwriter agrees to place as much of an offering with investors as possible, but is not responsible for any portion of the offering it fails to sell."

You might be interested in
Vanguard has an overall (composite) WACC of 10%, which reflects the cost of capital for its average asset. Its assets vary widel
Svetradugi [14.3K]

Answer:

The projects which maximize Vanguard's shareholder wealth are Project A; Project B; Project D.

Explanation:

Projects which maximize the shareholder value are projects delivering Expected Returns which are higher than its risk-adjusted weighted average cost of capital (WACC).

As a result, Project A with Expected return of 15% and risk adjusted WACC of 12%; Project B with Expected return of 12% and risk adjusted WACC of 10%; Project D with Expected return of 9% and risk adjusted WACC of 8%; are the projects that maximize the shareholder's value.

On the other hand, Project C with Expected return of 11% and risk adjusted WACC of 12% is harmful to shareholder value.

8 0
3 years ago
At the beginning of a year, a company predicts total direct materials costs of $1,020,000 and total overhead costs of $1,220,000
Dima020 [189]

Answer:

Predetermined manufacturing overhead rate= $1.961 per direct material dollar

Explanation:

Giving the following information:

At the beginning of a year, a company predicts total direct materials costs of $1,020,000 and total overhead costs of $1,220,000.

To calculate the predetermined manufacturing overhead rate we need to use the following formula:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= 1,220,000/1,020,000

Predetermined manufacturing overhead rate= $1.961 per direct material dollar

5 0
2 years ago
Without creating a separate business organization, Roy starts up Sole Savers, a new, pre-owned auto sales enterprise. Roy is
s2008m [1.1K]

Roy is a sole trader if he is not setting up a company instead starts a business.

<h3>What is a Business?</h3>

A business is the process of selling goods or services and earning revenue and profits through it, the business generates revenue which is deducted by the expenses incurred by the business. The business ensures the strategy to have a balance between these expenses and revenue so that there is some residue profit.

The sole trader is the business where the owner of the business is highly involved in day to day running of the business taking all the strategic decisions and responsible for all the debts of the business.

On the other hand a limited liability company is a business in which the owner of the company can be involved in day to day running of the operations but is not liable personally for the debts.

Learn more about Trader at brainly.com/question/27235892

#SPJ1

5 0
1 year ago
Our company has an account receivable for $12,500 that we have now deemed uncollectible. We use the direct write-off method. Whi
ryzh [129]

Answer: a. Accounts Receivable

Explanation:

The Direct Write-off method is usually used by businesses where Uncollectible Receivables are not common. This way when it does occur, they simply debit the Bad Debts accounts and credit the Accounts Receivables to show the event.

This method of Accounting violates the Matching Principle under the Accrual basis because it usually does not recognize bad debts in the same period that the inventory was sold. It only records bad debts when they are declared which could be periods afterwards.

3 0
3 years ago
Adding a chart to the header of a form will result in a(n)
Sonbull [250]

Answer:

Chart without a legend.

Hope this helped.

8 0
3 years ago
Other questions:
  • Appliance Possible Inc. (AP) is a manufacturer of toaster ovens. To improve control over operations, the president of AP wants t
    9·1 answer
  • A landowner validly conveyed a small office building to the green party "as long as they use it for operating quarters until the
    6·2 answers
  • Identify and explain two reasons why it would be important for Bill to be motivated if he starts
    12·1 answer
  • ABC stock has just closed at $70.50. A customer has an open order on the Specialist's book (DMM's book) to sell short 100 shares
    13·1 answer
  • The following is a free response question released by the College Board from a previous AP exam to be used as practice for futur
    7·1 answer
  • Cooper Company has a direct materials standard of 2 gallons of input at a cost of $12.50 per gallon. During July, Cooper Company
    7·1 answer
  • What comprises the features of an organization is not universally agreed upon, but most authorities believe that there are a sma
    12·1 answer
  • Fe2O3 + 3 CO → Fe + 3 CO2
    5·1 answer
  • What are hollow corporations? A. companies that market their products through franchisees B. companies that outsource all produc
    9·1 answer
  • The repayment of a note payable is classified in the statement of cash flows as a(n): _______
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!