Determine the total costs of issue

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An insurance bank acquired 5M shares of company ABC in its initial offering for 20M euros, and it sold them to the public for a price of 5 euros per share. At the end of the first day of trading, those shares were listed at 8 euros per share. The company did not pay the insurance bank any other costs.

a) Determine the total costs of this issue as a function of the market value of shares.

b) Of the 5M shares issued, only 1M were new (the other ones belonged to founders). How much money did the company raise in the public offering?

Reference: EPF cole dIngnieurs MONTPELLIER campus - SPAN 208 Exercises2015(1)

Reference no: EM132816370

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