Answered step by step
Verified Expert Solution
Question
1 Approved Answer
John is seeking a new investor for his business. Currently, his business is worth $800,000. A previous investor owns 25% of the business, and John
John is seeking a new investor for his business. Currently, his business is worth $800,000. A previous investor owns 25% of the business, and John owns the other 75%. 10. (2 pts.) What is the value of the investor's equity? 11. (2 pts.) What is the value of John's equity? 12. (2 pts.) John is seeking another $200,000 to finance expansion of his business. How much equity must John give the new investor? 13. (2 pts.) What is the post-money valuation of the business after the new investor invests? 14. (2 pts) If the original investor has a full ratchet clause and must maintain 25% ownership of the firm, how much equity must John give up to compensate the original investor? 15. (2 pts.) After the ratchet is paid (i.e., John gives the original investor the equity needed to maintain 25% ownership), what is the value of John's equity
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started