Biology Forums - Study Force

David found a company and goes through the investment rounds shown below:

Round

Source

Price

Number of Shares

Series A

Self

$0.50

400,000

Series B

Angel

$1.00

500,000

Series C

Venture Capital

$1.50

300,000

Series D

Venture Capital

$2.25

400,000

He decides to take the company public through an IPO, issuing 2 million new shares. Assuming that he successfully completes the IPO, the net income for the next year is estimated to be $8 million. His banker informs him that the price of shares should be set using average price-earnings ratios for similar businesses, which is 15.0. What will be the IPO price per share?

▸ $20.25

▸ $60.00

▸ $3.40

▸ $33.33

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