Use the Table for the Question(s)below

question 60

Multiple Choice

Use the table for the question(s) below.
David founds a company and goes through the investment rounds shown below:
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?

• A)11%
• B)14%
• C)16%
• D)22%
• E)50%

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Definitions:

Fairness

The impartial and just treatment or behavior without favoritism or discrimination.

Equity

The principle of fairness and justice in the allocation of resources, opportunities, and treatment of individuals and groups, aiming to address systemic inequalities.

Merit

A quality of being particularly good or worthy, typically used to acknowledge or reward someone's achievement or quality.

Benevolence

The quality of being well-meaning; kindness or the desire to do good and act generously towards others.