(a) Draw the project network for completing the initial public offering of InterCat stock. How
long is the initial public offering process? What are the critical steps in the process?
(b) How would the change in the following activities affect the time to complete the initial public offering? Please evaluate each change independently.
(i) Some members of the syndicate are playing hardball. Therefore, the time it takes to negotiate the commitment of each member of the syndicate increases from 2 to 3 weeks.
(ii) The underwriters are truly math geniuses. Therefore, the time it takes to calculate the
issue price decreases to 4 weeks.
(iii) Whoa! The SEC found many deficiencies in the initial registration statement. The underwriters must therefore spend 2.5 weeks amending the statement and resubmitting it
to the SEC.
(iv) The new issue does not comply with the “blue sky” laws of a handful of states. The
time it takes to edit the issue for each state to ensure compliance increases to 4 weeks.
(c) Janet and Gilbert hear through the grapevine that their most fierce competitor, Soft Sales,
is also planning to go public. They fear that if InterCat does not complete its initial public offering before Soft Sales, the price investors are willing to pay for InterCat stock will
drop, since investors will perceive Soft Sales to be a stronger, more organized company.
Janet and Gilbert therefore decide that they want to complete the process of issuing new
stock within 22 weeks. They think such a goal is possible if they throw more resources—
workers and money—into some activities. They list the activities that can be shortened,
the time the activity will take when it is fully shortened, and the cost of shortening the activity this much. They also conclude that partially shortening each activity listed below is
possible and will give a time reduction and cost proportional to the amounts when fully
shortening.