Back in their college days, David and Douglas Finn started renting refrigerators to other students for use in their dormitory rooms. Over the years, Finns’ Fridges has grown and financed its operations by retaining most of the profits it made. Now, however, the brothers would like to “cash out” by taking the company public through an IPO. Together, the brothers own one million shares and will sell half of their holdings. In addition, the company will issue 250,000 new shares as part of the IPO to provide additional growth financing. What percentage of the firm’s shares will the Finns own after the IPO?
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