Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Starware Software was founded last year to develop software for gaming applications. The founder initially invested $800,000 and received 12 million shares of stock. Starware

Starware Software was founded last year to develop software for gaming applications. The founder initially invested $800,000 and received 12 million shares of stock. Starware now needs to raise a second round ofcapital, and it has identified a venture capitalist who is interested in investing. This venture capitalist will invest $1.00 million and wants to own 28% of the company after the investment is completed.

a. How many shares must the venture capitalist receive to end up with 28% of thecompany? What is the implied price per share of this fundinground?

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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Foundations of Financial Management

Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen

16th edition

125927716X, 978-1259687969, 1259687961, 978-1259277160

More Books

Students also viewed these Finance questions