Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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A potential investor is willing to provide $500,000 in first-round financing with the expectation of a 50%
annual compound rate of return over the next five years. Founders currently hold 1,000,000 million shares of
stock. The venture is expected to produce $500,000 in net income in year 5. A similar firm with annual net
income of $1,000,000 sold shares to the public for $10,000,000. What is the issue price per share?
a. $0.1939
$0.3168
$0.1203
d. $0.1584
b.
C.
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Transcribed Image Text:A potential investor is willing to provide $500,000 in first-round financing with the expectation of a 50% annual compound rate of return over the next five years. Founders currently hold 1,000,000 million shares of stock. The venture is expected to produce $500,000 in net income in year 5. A similar firm with annual net income of $1,000,000 sold shares to the public for $10,000,000. What is the issue price per share? a. $0.1939 $0.3168 $0.1203 d. $0.1584 b. C.
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