elevin10 elevin10

22-01-2021
Business

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True or False: When firm A firstly issued 1 million shares through IPO, firm A raised $10/share so it totally raised $10 million equity fund. Now the market price for firm A's stock is $50/share, so today firm A raises a total of $50 millions from shareholders. Explain.

Respuesta :

andromache andromache

07-09-2021

A total of $50 million from shareholders could not be raised.

The following information should be relevant:

There is no cash inflow of the company when the IPO proceeds are done.
If there is an increase in the share price so this shows the increase in the wealth for the shareholders or the capital increment.
No cash flow should be made like $50 million represent the market capitalization of the company.
It presents the value of the company, the same should be used for the acquisition purpose.

Therefore we can conclude that a total of $50 million from shareholders could not be raised.

Learn more about the share here: brainly.com/question/13931207

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