1.    
In the Dutch
Auction the company would have to pay just the underwriter fee so she can
conduct the auctions. In the general cash offering, the company would have to
pay the cost for the underwriter plus the underpricing cost, because they sell
for usually a lower price to the underwriter that will then sell it for a
higher price. So, underpricing happens with the General Cash offering, making
the Dutch Auction a better option for the company to go public. (Underpricing
could still happen in Dutch Auction but not as likely).           

 

2.    
The big advantage
of raising the IPO to $90 million is that the company can raise extra cash,
preventing them of having to go to the market again in the future. But the big
disadvantage is that by doing so, the company will have extra money that it doesn’t
really need, which can lead to bad management choices and spending of that
money.

 

3.     Underwriter Fee= 7%                                                        Other Fees = $110,000

      Legal Fees =    $1,800,000                                 Trans. Agent Fee = $6,500

       SEC Fees =     $12,000                                Engraving
Expenses = $520,000    

     Filing Fees =
    $15,000                                           NADASQ Fee= $100,000  

Amount/Raise=     $75,000,000                    

                              

Underwriter fee = 75,000,000*7% = $5,250,000

 

Sum of Fees

               5,250,000
+ 1,800,000 + 12,000 + 15,000 + 100,000 + 6,500 + 520,000 + 110,000 = $7,813,500

 

Funds Received = Amount to Raise – Underwriter Fee

                             = 75,000,000 –
5,250,000

                             = $69,750,000

 

IPO Cost = Total Fees/Funds Received

               =
$7,813,500/$69,750,000

               =
0.112 or 11.2%

 

4.    
 If the employees sell their share on the first
offering, they might lose some money due to underpricing. But if they decide
not to sell it the first time, they might have to wait up to 180 days for the
called “lockup period”. And it is possible that after the first offering the
prices will have dropped. So, it is really up to the employee to decide which
option he would prefer.