The Founder of a Company Currently Holds 12 Million of the 15

question 77

Multiple Choice

The founder of a company currently holds 12 million of the 15 million shares in that company. She considers an IPO where she sells a mix of primary shares and 2 million of her own secondary shares for $18 per share. If she wants to retain a 60% ownership of the company, how much money can she raise in this IPO?

• A)$42 million
• B)$30 million
• C)$66 million
• D)$54 million

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Definitions:

Operations

The day-to-day activities involved in running a business or manufacturing process, focusing on efficiency and effectiveness.

Payback Period

The length of time it takes for an investment to generate an amount of income or cash equal to the cost of the investment.

Salvage Value

The projected sale price of an asset after its period of utility has concluded.

Net Cash Flows

Net Cash Flows indicate the total amount of money being transferred into and out of a business, highlighting the company's liquidity over a specific period.