West coast manufacturing company

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West Coast Manufacturing Company is executing initial public offering with the following characteristics. The company will sell 10 million shares at an offer price of $25 per share., the underwriter will charge a 7% underwriting fee, and the shares are expected to for $32 per share by the end of the first day's trading. Assume the this IPO is executed as anticipated.

a. Calculate the initial return earned by investors who are allocated shares in the IPO.

b. How much will West Coast Manufacturing Company receive from the offering?

c. What is the total cost (underwriting fee and underpricing) of this issue to West Coast Manufacturing Company?

Reference no: EM131044624

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