Question
Amazon first funding round. It needs an investment of USD 9 million. Peter Lynch, an investor, agrees to a price of USD 12 per share.
Amazon first funding round. It needs an investment of USD 9 million. Peter Lynch, an investor, agrees to a price of USD 12 per share. Ben and Jess, the founders of Amazon, own 800,000 shares. Show working for relevant formula.
The number of shares issued?
What is the pre-money valuation of Amazon?
What is the post-money valuation of Amazon?
Now assume that a second investor, Jeff, has a higher required rate of return than the first investor. Would they offer a higher or lower pre-money valuation? Why?
What is the insight behind the result in part 4?
Step by Step Solution
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There are 3 Steps involved in it
Step: 1
Number of shares issued to Peter Total money invested Rate per share USD 9 Million USD 12 750000 So ...
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Step: 2
Step: 3
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Financial Institutions Management A Risk Management Approach
Authors: Marcia Cornett, Patricia McGraw, Anthony Saunders
8th edition
978-0078034800, 78034809, 978-0071051590
