Question

The firm you founded currently has 10 million​ shares, of which you own 8 million. You are considering an IPO where you would sell 1 million shares for $ 24 each. If all of the shares sold are from your​ holdings, how much will the firm​ raise? What will be your percentage ownership of the firm after the​ IPO? If all of the shares sold are from your​ holdings, ​(Select the best choice​ below.) A. the firm will raise ​$192 million from the IPO. B. the firm will raise ​$24 million from the IPO. C. the firm will raise no money from the IPO. D. the firm will raise ​$240 million from the IPO. Your percentage ownership of the firm after the IPO will be nothing​%.

Answer 1

the firm will raise no money from the IPO.

70% of shares owned

Step-by-step explanation:

When a firm wants to get capita it issues new shares into the market, investors purchase the shares and give the business money. Subsequently the business does not gain money because sale of existing shares will only benefit it's holder.

In this scenario the firm does not gain any money because the shares being sold are already existing ones.

To get percentage ownership after the IPO

Total shares= 10 million

Shares owned= 8 million

Shares sold= 1 million

Shares left= 8 million - 1 million = 7 million

Percentage of shares owned= (7million ÷ 10 million) * 100

Percentage of shares owned= 70%