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:

Round	Date	Investor	Shares	Share Price ($)
Series A	Feb. 2013	You	700,000	0.50
Series B	Aug. 2014	Angels	1,000,000	1.00
Series C	Sept. 2015	Venture Capital	2,200,000	3.50

It is now

2016

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

6.0

million new shares through this IPO. Assuming that your firm successfully completes its IPO, you forecast that

2016

net income will be

$6.5

million.

a. Your investment banker advises you that the prices of other recent IPOs have been set such that the P/E ratios based on

2016

forecasted earnings average

20.3.

Assuming that your IPO is set at a price that implies a similar multiple, what will be your IPO price per share?

b. What percent of the firm will you own after the IPO?