ebay, Inc., the Internet auction company, was founded in 1995 by Pierre Omidyar as a result of

Question:

ebay, Inc., the Internet auction company, was founded in 1995 by Pierre Omidyar as a result of his interest in collecting and trading Pez dispensers. The company quickly became successful and on May 20, 1996, was incorporated, with 14,700,000 shares being sold to Omidyar for $14,262. Benchmark Capital, a venture capital firm, purchased approximately 3,000,000 shares in the middle of 1997 for approximately $3,000,000. In September 1998, the company had an initial public offering of common stock. The offering prospectus made the following disclosures:

Common stock offered by the Company . . . . 3,489,275 shares

Common stock to be outstanding after

this offering . . . . . . . . . . . . . . . . . . . . . . . . . . 39,739,076 shares

Use of proceeds . . . . . . . . . . . . . . . . . . . . . . .For capital expenditures, to repay indebtedness, and for general corporate purposes, including working capital.

Proposed Nasdaq National Market

symbol . . . . . . . . . . . . . . . . . . . . . . . . . . . . . â€œEBAYâ€

ebay, Inc., the Internet auction company, was founded in 1995

The stockholdersâ€™ equity prior to the IPO showed a balance of approximately $9 million, including contributions from a variety of venture capital firms and individuals.
a. Why did Omidyar incorporate the business in 1996?
b. If Benchmark Capital sold its interest in eBay shortly after the IPO, how much was its gain?
c. How much was the underwriter paid for underwriting eBayâ€™s IPO?
d. What percent of eBayâ€™s voting stock did public shareholders receive on the IPO date?
e. What percent of the shareholdersâ€™ equity did the public shareholders supply to eBay as of the IPO date?
f. How much unrealized gain does Omidyar have in eBay stock today, assuming that no stock has been acquired or sold since the initial purchase at incorporation? Use the Internet to find eBayâ€™s current stock price to answer thisquestion.