Five years ago, you founded TechMed Solutions, a company specializing in wearable health monitoring devices. Your company has gone through three funding rounds: Round Date Investor Series A March 2019 Founders Shares Share Price ($) 1,500,000 2.00 Series B July 2020 Angel Investors 2,400,000 3.50 Series C October 2021 Venture Capital 4,200,000 5.75 It is now 2022, and you need to raise additional capital to expand your product line and enter international markets. You have decided to take your company public through an IPO. You plan to issue an additional 40 million new shares through this IPO. Assuming your firm successfully completes its IPO, you forecast that 2022 net income will be $12.8 million. Your investment banker advises you that prices of other recent IPOs in the healthcare technology sector have been set such that the P/E ratios based on 2022 forecasted earnings average 24.5. Assuming that your IPO is set at a price that implies a similar multiple, what will be your IPO price per share?

Five years ago, you founded TechMed Solutions, a company specializing in wearable health monitoring devices. Your company has gone through three funding rounds: Round Date Investor Series A March 2019 Founders Shares Share Price ($) 1,500,000 2.00 Series B July 2020 Angel Investors 2,400,000 3.50 Series C October 2021 Venture Capital 4,200,000 5.75 It is now 2022, and you need to raise additional capital to expand your product line and enter international markets. You have decided to take your company public through an IPO. You plan to issue an additional 40 million new shares through this IPO. Assuming your firm successfully completes its IPO, you forecast that 2022 net income will be $12.8 million. Your investment banker advises you that prices of other recent IPOs in the healthcare technology sector have been set such that the P/E ratios based on 2022 forecasted earnings average 24.5. Assuming that your IPO is set at a price that implies a similar multiple, what will be your IPO price per share?

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter13: Investing In Mutual Funds, Etfs, And Real Estate

Section: Chapter Questions

Problem 3FPE

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