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2 weeks ago
The founders and owners of a private company have funded it through the following rounds of investment:

RoundSourcePriceNumber of Shares
Series ASelf$1.00200,000
Series BAngel$1.00300,000
Series CVenture Capital$1.25400,000

The owners decide to take the company public through an IPO, issuing 1 million new shares. Assuming that they successfully complete the IPO, the net income for the next year is estimated to be $5 million. The price of shares is set using average price-earnings ratios for similar businesses of 17.0. What portion of the company will be owned by the angel investor after the IPO?

▸ 16%

▸ 30%

▸ 12%

▸ 22%
Textbook 
Fundamentals of Corporate Finance
Edition: 2nd
Authors:
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