ABC Ltd., a technology company, issues a $47.2 million IPO providing proceeds to ABC of $5.31 per share, from an offer price to the public of $5.9 per share. The company's legal fees, ASIC registration fees, and other administrative costs are $164,000. The company's share price increases 5.6 per cent on the first day. What is the total amount of the underwriter’s spread (in millions of dollars to the nearest three decimal places; don’t use the $ sign eg 7.897)?
Gross Issue = $ 47.2 million, Net Proceeds = $ 5.31 per share and Offer Price = $ 5.9
Number of Shares Sold = 47.2 / 5.9 = 8 million
Net Proceeds = 5.31 x 8 = $ 42.48 million
IPO Costs (ASIC fees + Legal Fees + Administrative Costs) = $ 164000
Therefore, Total Amount of Underwriter's Spread = (47.2 - 42.48 - 0.164) = $ 4.556 million
ABC Ltd., a technology company, issues a $47.2 million IPO providing proceeds to ABC of $5.31...
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