Share
Explore BrainMass

Amazon, Inc: Total proceeds from IPO offering, percentage to investment bankers.

See attached Excel.

In the IPO, the firm issued 3,000,000 new shares. The initial price was $18.00/share with investment bankers retaining $1.26 as fees. The final first-day closing price was $23.50

1. What were the total proceeds from this offering? What part by the investment bankers? What percent of the offering is this?

2. Mr. Doerr of Kleiner Perkins Caufield & Byers owned a significant number of shares. What was the market value of these shares at the end of the first day of trading?

3. What was the market value of Amazon.com following its first day as a publicly held company?

Attachments

Solution Preview

Question 1
The total proceeds from the offering are:

# of newly issued shares x Initial Price = 3,000,000 x $18 = $54,000,000

Since the investment bankers kept $1.26 per share, and there were 3 million shares issued, then the part that was taken by investment bankers as fees was:

3,000,000 x $1.26 = $3,780,000

The percentage from the total ...

Solution Summary

The solution shows the calculations and explains the problems.

$2.19