Study guide ex. Benjamin Garcia' s start-up business is succeeding, but he needs $200,000 in

additional funding to fund continued growth. Benjamin and an angel investor agree

the business is worth $800,000 and the angel has agreed to invest the $200,000 that is

needed. Benjamin presently owns all 40,000 shares in his business. What is a fair

price per share and how many additional shares must Benjamin sell to the angel?

Because the stock will be sold directly to an investor, there is no spread; the other

flotation costs are insignificant.