Three years ago, you founded Outdoor Recreation, Inc., a retailer specializing in the sale of equipment and clothing for recreational activities such as camping, skiing, and hiking. So far, your company has gone through three funding rounds:

Currently, it is 2012 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 6.5 million new shares through this IPO. Assuming that your firm successfully completes its IPO, you forecast that 2012 net income will be $7.5 million.

Your investment banker advises you that the prices of other recent IPOs have been set such that the P/E ratios, based on 2012 forecasted earnings, average 20.0. Assuming that your IPO is set at a price that implies a similar multiple, what will your IPO price per share be?

What percentage of the firm will you own after the IPO?

Problem 23-12 Three years ago, you founded Outdoor Recreation, Inc., a retailer specializing in the sale of equipment and clothing for recreational activities such as camping, skiing, and hiking. So fa company has gone through three funding rounds: Round Series A Series B Series C Date Feb. 2009 Aug. 2010 Sept. 2011 Investor You Angels Venture Capital Shares 500,000 1,000,000 2,000,000 Currently, it is 2012 and you need to raise additional capital to expand your business. You h decided to take your firm public through an IPO. You would like to issue an additional 6.5 m new shares through this IPO. Assuming that your firm successfully completes its IPO, you forecast that 2012 net income will be $7.5 million. a. Your investment banker advises you that the prices of other recent IPOs have been se that the P/E ratios, based on 2012 forecasted earnings, average 20.0. Assuming that y IPO is set at a price that implies a similar multiple, what will your IPO price per share b. What percentage of the firm will you own after the IPO? New shares 2012 net income forecast Forward P/E 6,500,000 $7,500,000 20.00 a. Your investment banker advises you that the prices of other recent IPOs have been se that the P/E ratios, based on 2012 forecasted earnings, average 20.0. Assuming that y IPO is set at a price that implies a similar multiple, what will your IPO price per share New shares outstanding Earnings per share New price with comparable P/E b. What percentage of the firm will you own after the IPO? Percentage you own post IPO Requirements 1. In cell E21, by using cell references, calculate the number of new shares outstanding pt.). 2. In cell E22, by using cell references, calculate the forecasted earnings per share (1 pt 3. In cell E23, by using cell references, calculate the share price for the IPO (1 pt.). 4. In cell E27, by using cell references, calculate the percentage of the firm that you ow the IPO (1 pt.). lizing in the sale of g, and hiking. So far, your Share Price ($) 1.00 2.00 3.50 our business. You have e an additional 6.5 million pletes its IPO, you t IPOs have been set such .0. Assuming that your IPO price per share be? t IPOs have been set such .0. Assuming that your IPO price per share be? shares outstanding (1 ings per share (1 pt.). the IPO (1 pt.). he firm that you own after