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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?

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