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Start-Up Corp is succeeding but needs $400,000 in additional funding to fund continued growth. The business is currently worth $1.6 million and an angel investor
Start-Up Corp is succeeding but needs $400,000 in additional funding to fund continued growth. The business is currently worth $1.6 million and an angel investor has agreed to invest the additional $400,000 it needs. Start-Up currently owns all existing 40,000 shares in the firm. a) What is the fair price per share and how many shares must Start-Up offer to the angel (assuming no flotation costs)? b) What percentage of firm ownership must Start-Up give up to the angel investor, i.e., how much of the company will it still own after the deal?
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