Compute expected return given these three economic states

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Reference no: EM132021613

1. A company is planning an IPO of 10 million shares. Each share is expected to sell at $15 per share. The investment banker will charge an 8% spread and incur expenses of $5,000,000. The company will incur expenses of $2,500,000. How much will the investment banker receive if all shares sell at the expected price?

2. Compute the expected return given these three economic states, their likelihoods, and the potential returns: (Round your answer to 2 decimal places.) Economic State Probability Return Fast growth 0.32 38 % Slow growth 0.34 12 Recession 0.34 –31.

Reference no: EM132021613

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