Use the Table for the Question(s)below

question 96

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 $12.50 per share for 4 million shares.The IPO underwriters had a spread of 6.5%.What was the total fee paid to the underwriters?

• A)$3.25 million
• B)$4 million
• C)$260,000
• D)$2.25 million
• E)$12.5 million

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Definitions:

1790s

Referring to the decade of the 1790s, which was the final decade of the 18th century, marked by significant historical events and the early years of the United States.

1870

marks the year significant for several historical events, such as the completion of the Fifteenth Amendment in the United States, granting African American men the right to vote.

Demographic Variables

Characteristics of populations used in social science and statistics, such as age, gender, income level, and educational attainment, to study changes and trends.

Correlated

When two or more variables have a mutual relationship or connection, where changes in one tend to be associated with changes in the other.