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barmour44 barmour44
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Posts: 420
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4 years ago
David found a company and goes through the investment rounds shown below:

RoundSourcePriceNumber of Shares
Series ASelf$0.50400,000
Series BAngel$1.00500,000
Series CVenture Capital$1.50300,000
Series DVenture Capital$2.25400,000

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 share of the company will David own after the IPO?

▸ 11%

▸ 22%

▸ 16%

▸ 14%
Textbook 
Fundamentals of Corporate Finance

Fundamentals of Corporate Finance


Edition: 2nd
Authors:
Read 85 times
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wrote...
#1
4 years ago
11%
barmour44 Author
wrote...
#2
4 years ago
Thank you
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