Use the Table for the Question(s)below

question 105

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.
-An IPO is offered at $17 per share for 3 million shares.The IPO underwriters had a spread of 7%.What price did the underwriters pay per share of the IPO firm?

• A)$14
• B)$17
• C)$15.81
• D)$18.19
• E)$16

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Definitions:

Genital Stage

In Freudian psychosexual development, the final stage characterized by mature sexual interests and activities, typically beginning at puberty.

Puberty

The period during which adolescents reach sexual maturity and become capable of reproduction.

Children Enter

The phase when children begin a particular stage or environment, such as starting school or entering puberty.

Anal Stage

The second phase in Freud's psychosexual development theory, focusing on pleasure from controlling bladder and bowel movements.