Valuing Private Company: Shane Bauer Wants to Invest in Trajectory

Valuing private company: Shane Bauer wants to invest in Trajectory Tech, a private company. Based on earnings multiples of similar publicly traded firms, Shane estimates the value of the private company's stock to be $18.97 per share. He plans to acquire a majority of the shares in the company. The expected control premium is 12 percent. He estimates the marketability discount for such a firm to be 15 percent. The discount for the key person, one of the founders who may leave the firm upon Shane's control of the firm, is 15 percent. What price should he be willing to pay for these shares?

A) $15.35
B) $28.10
C) $14.05
D) $30.70