Just got a little confused and I am perhaps thinking a little slow today. But just wanted to ask what is the correct way to calculate fractions. I am going through this tutorial
- You have 53,2 shares issued and the overallotment percentage is 15%, meaning it should be 15% of those 53,2 shares.
- In a tutorial I am going through here they calculate this as 53,2/(1+0,15) = 6,9. However, if you divide 6,9/53,2 you get to 13%… Why does he not take 0,15*53,2 to arrive at 8m shares?
Which way is correct?
The 53.2 shares include the original shares planned (S) + overallotment of 15%
53.2 = S + (S \times 15\%)
53.2 = S \times (1 + 0.15)
So, the original number of shares that they planned to issue was:
S = \frac{53.2}{1.15} = 46.26 shares
And the overallotment is:
15\% \times 46.26 = 6.939 shares
To check:
\frac{6.939}{46.26} \approx 15\%
Thanks a lot! Another silly one:
- The implied post money valuation @ trading is 3079
- The IPO discount is 15%.
- They calculate the post money valuation @ pricing to be 3079/(1+0,15) = 2677
- This means that the discount is 401,6.
However that discount is 15% of the post money valuation @ pricing value of 2677. Why do they not calculate the discount as 3079 * 0,15 = 462 and then the post money valuation @ pricing would equal 2617?
Seems strange that the IPO discount is 15% of the post money valuation @ pricing and not the post money valuation @trading?
Check the math in your fourth bullet: “This means the discount is 401.6.” Not true.
The numerical discount is 462 (3,079 - 2,617 = 462).
The relative discount is: 462 / 3,079 = 15%.