The founders and owners of a private company have funded it through the following rounds ofinvestment: $$\begin{array} { l l c c }
\text { Round } & \text { Source } & \text { Price } & \text { Number of Shares } \\hline
\text { Class A } & \text { Self } & \$ 1.00 & 200,000 \
\text { Class B } & \text { Angel } & \$ 1.00 & 300,000 \
\text { Class C } & \text { Venture Capital } & \$ 1.25 & 400,000
\end{array}$$ 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 will be the IPO price per share?

Question

The founders and owners of a private company have funded it through the following rounds ofinvestment: $$\begin{array} { l l c c } 
\text { Round } & \text { Source } & \text { Price } & \text { Number of Shares } \\hline
\text { Class A } & \text { Self } & \$ 1.00 & 200,000 \
\text { Class B } & \text { Angel } & \$ 1.00 & 300,000 \
\text { Class C } & \text { Venture Capital } & \$ 1.25 & 400,000
\end{array}$$ 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 will be the IPO price per share?

Quizplus · Accepted Answer

The Answer of The founders and owners of a private company have funded it through the following rounds ofinvestment: $$\begin{array} { l l c c } 
\text { Round } & \text { Source } & \text { Price } & \text { Number of Shares } \\hline
\text { Class A } & \text { Self } & \$ 1.00 & 200,000 \
\text { Class B } & \text { Angel } & \$ 1.00 & 300,000 \
\text { Class C } & \text { Venture Capital } & \$ 1.25 & 400,000
\end{array}$$ 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 will be the IPO price per share?

The Founders and Owners of a Private Company Have Funded