Answer:
$8.53
Explanation:
As per the data given in the question,
Total sales
= 150,000 × $400
= $60,000,000
Variable = $37,500,000
Fixed cost = $1,000,000
Depreciation = $1,500,000
Tax rate = 35% = 0.35
Net Income = (Sales - Variable - Fixed cost - Depreciation) (1 -Tax rate)
= ( $60,000,000 - $37,500,000 - $1,000,000 - $1,500,000)(1 -0.35)
= $13,000,000
Price per share
= Net income ÷ Existing Fit-bit shares
= $13,000,000 ÷ 2,000,000
= $6.5
Total IPO value = Pre-IPO value + Post-IPO value
= [$91,100,000 + (6.5 × 36,500,000)] ÷ ( 2,000,000 + 36,500,000)
= $8.53
We simply applied the above formula
