The Founders and Owners of a Private Company Have Funded

question 92

Multiple Choice

The founders and owners of a private company have funded it through the following rounds of investment: Round Source Price Number of Shares
Series A Self $1.00 100,000
Series B Angel $1.00 225,000
Series C Venture Capital $1.25 350,000
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 $6 million. The price of shares is set using average price-earnings ratios for similar businesses of 15. What portion of the company will be owned by the angel investor after the IPO?

• A)10%
• B)13%
• C)19%
• D)24%

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Definitions:

Alpha Waves

Brainwave patterns associated with a relaxed, yet awake, state.

Beta Waves

Brainwaves detected by an EEG that represent a state of wakefulness and alert concentration.

Lighting

The manipulation or use of light sources to achieve practical or aesthetic effects in environments.

Social Media

Online platforms that facilitate the creation, sharing, and exchange of content and ideas among users.