Firm commitment versus best efforts. Astro Investment Bank offers Lunar Vacations the following options on its initial public sale of equity: (a) a best efforts arrangement whereby Astro will keep 2.7% of the retail sales or (b) a firm commitment arrangement of $10,100,000. Lunar plans on offering 1,000,000 shares at $11.84 per share to the public. If it sells 100% of the shares, which is the better choice for Lunar Vacations? Which is the better choice for Astro Investment Bank? Under the best efforts arrangement, what are the proceeds for Lunar Vacations? $ 11520320 (Round to the nearest dollar.) Under the firm commitment arrangement, what are the proceeds for Lunar Vacations? $ 10100000 (Round to the nearest dollar.) The best choice for Lunar Vacations is the best efforts arrangement. (Select from the drop-down menu.) Under the best efforts arrangement, what are the proceeds for Astro Investment Bank? $ (Round to the nearest dollar.)

Firm commitment versus best efforts. Astro Investment Bank offers Lunar Vacations the following options on its initial public sale of equity: (a) a best efforts arrangement whereby Astro will keep 2.7% of the retail sales or (b) a firm commitment arrangement of $10,100,000. Lunar plans on offering 1,000,000 shares at $11.84 per share to the public. If it sells 100% of the shares, which is the better choice for Lunar Vacations? Which is the better choice for Astro Investment Bank? Under the best efforts arrangement, what are the proceeds for Lunar Vacations? $ 11520320 (Round to the nearest dollar.) Under the firm commitment arrangement, what are the proceeds for Lunar Vacations? $ 10100000 (Round to the nearest dollar.) The best choice for Lunar Vacations is the best efforts arrangement. (Select from the drop-down menu.) Under the best efforts arrangement, what are the proceeds for Astro Investment Bank? $ (Round to the nearest dollar.)

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter11: Venture Capital Valuation Methods

Section: Chapter Questions

Problem 1dM

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Astro Investment Bank offers Lunar Vacations the following options on its initial public sale of equity: (a) a best efforts arrangement whereby Astro will keep 2.4% of the retail sales or (b) a firm commitment arrangement of $10,100,000. Lunar plans on offering 1,000,000 shares at $11.36 per share to the public. If it sells 100% of the shares, which is the better choice for Lunar Vacations? Which is the better choice for Astro InvestmentBank?
Steel City Motors wants to have an initial public offering. Their investment bank presents two options for the initial issue: a fixed commitment offer of $6,800,000, or a best-efforts arrangement where the Investment bank receives $1.60 per share offered to the public. Steel City intends to sell 1,000,000 shares at a price of $9. If 100% of the shares are sold at the predetermined price, which arrangement should Steel City choose?
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Nougat Corporation wants to raise $4.9 million via a rights offering. The company currently has 550,000 shares of common stock outstanding that sell for $50 per share. Its underwriter has set a subscription price of $25 per share and will charge the company a spread of 5 percent. If you currently own 3,000 shares of stock in the company and decide not to participate in the rights offering, how much money can you get by selling your rights? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) I keep getting the wrong answer, I get $2,430 and its not correct
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