2.2 Sezela Limited, has just sold 100 000 shares in an initial public offering. The underwriter's explicit fees were R60 000. The offering price for the shares was R40, but immediately upon issue, the share price jumped to R44. a) What is the total cost to Sezela Limited of the equity issue? b) Is the entire cost of the underwriting a source of profit to the underwriters?

2.2 Sezela Limited, has just sold 100 000 shares in an initial public offering. The underwriter's explicit fees were R60 000. The offering price for the shares was R40, but immediately upon issue, the share price jumped to R44. a) What is the total cost to Sezela Limited of the equity issue? b) Is the entire cost of the underwriting a source of profit to the underwriters?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter26: Mergers And Corporate Control

Section: Chapter Questions

Problem 7MC

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