Jordan Broadcasting Company is going to become a public company at a net price of

$40 per company share. There are also founding shareholders who will sell a part of their shares at the same price. Before the offer, the company had $24 million in profits divided among 8 million shares. The public offer will be for 5 million shares; 3 million will be new shares of the company and 2 million will be shares of the founding shareholders.

A) What is the immediate dilution based on the new shares offered by the company?

B) If the price/utility ratio of the share is 23 after the offer, what will be the price per share?

C) Should the founding shareholders be pleased with the $40 they received for their shares?