attachement

You founded QWE Inc, and your company has gone through three funding rounds: Round Date Investor Shares Share Price$ Series A Feb. 2015 You 1,000,000 1.00 Series B Aug. 2016 Angels 1,000,000 2.00 Series C Sept. 2018 Venture 3,000,000 3.50 capital Currently, it is 2020 and you need to raise additional capital to expand your business. You have decided to take your firm public through an IPO. You would like to issue an additional 5 million new shares through this IPO. You forecast that 2020 net income will be $4 million. Your investment banker advises you that the prices of other recent lPOs have been set such that the P/E ratios based on 2020 forecasted earnings average 25. Assuming that your IPO is set at a price that implies a similar multiple. 1.What will your IPO issuing price per share be? Assuming that the underwriting fee is 7%, how much can you raise from the IPO? 2.The IPO is a success with investors, and the share price rises 30% on the first day of trading. What is the market value of the firm post IPO? 3.What percentage of the rm will you own after the IPO? 4.Assuming that the post-IPO value of the firm is its fair market value. What is the total cost to the rm's original investors due to market imperfections from the IPO? What is the cost to the rm's original investors due to underpricing? What is the cost to the firm's original investors due to undenNriting fees? 5.Show the assumption(s) you have made to solve the question above.|