Three yearsago, you founded OutdoorRecreation, Inc., a retailer specializing in the sale of equipment and clothing for recreational activities such ascamping, skiing, and hiking. Sofar, your company has gone through three fundingrounds:

Round	Date	Investor	Shares	Share Price($)
Series A	Feb. 2013	You	500,000	1.00
Series B	Aug. 2014	Angels	1,000,000	2.00
Series C	Sept. 2015	Venture Capital	2,000,000	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 6.5 million new shares through this IPO. Assuming that your firm successfully completes itsIPO, you forecast that 2016 net income will be$7.5 million.

a. Your investment banker advises you that the prices of other recent IPOs have been set such that theP/E ratios based on2016 forecasted earnings average 20.0.

Assuming that your IPO is set at a price that implies a similarmultiple, what will be your IPO price pershare?

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