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GS is a private firm that was started by PK for developing specialized software for greeting card companies. PK had invested $100,000 in the company.

GS is a private firm that was started by PK for developing specialized software for greeting card companies. PK had invested $100,000 in the company. One year later, a venture firm Big Bucks offers PK $1 million for a twenty percent stake in the company. What is the pre-money value of GS?

A. $0.9M B. $3.0M C. $4.0M D. $5.0M

Note: The existing answer on Chegg ($5.0M) is INCORRECT.

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