David Found a Company and Goes Through the Investment Rounds

question 55

Multiple Choice

David found 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 $9 million. His banker informs him that the price of shares should be set using average price-earnings ratios for similar businesses, which is 14. What will be the IPO price per share?

• A) $3.68
• B) $22.07
• C) $36.79
• D) $68.06

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Definitions:

Autosomal Dominant

A pattern of inheritance where a trait can be expressed in an individual who has one copy of a gene associated with a trait.

Heterozygote

An organism having two different alleles of a specific gene, resulting in a mixed genotype.

Phenotypic

Relating to the observable characteristics or traits of an organism, which result from the interaction of its genotype with the environment.

Genotypic

Relating to the genetic constitution of an organism, defining its specific set of genes.