Starware Software was founded last year to develop software for gaming applications. The founder initially invested $ 800,000 and received 8 million shares of stock. Starware now needs to raise a second round of capital, and it has identified a venture capitalist who is interested in investing. This venture capitalist will invest $ 1.00 million and wants to own 20 % of the company after the investment is completed.

a. How many shares must the venture capitalist receive to end up with 20 % of the company? What is the implied price per share of this funding round?

b. What will the value of the whole firm be after this investment (the post-money valuation)?

a. How many shares must the venture capitalist receive to end up with 20 % of the company? What is the implied price per share of this funding round?

The venture capitalist will receive _____ million shares. (Round to three decimal places.)

The implied price per share is $____per share.(Round to the nearest cent.)

b. What will the value of the whole firm be after this investment (the post-money valuation)? The value of the firm will be $____million. (Round to three decimal places.)