Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You founded a firm some time ago, and own all of the 500 000 outstanding stocks. Now you need additional capital in order to grow.

image text in transcribed

You founded a firm some time ago, and own all of the 500 000 outstanding stocks. Now you need additional capital in order to grow. A venture capitalist is willing to invest $1 million for a 25% share of your company. You plan to issue new shares to sell to the venture capitalist. a. How many shares must you issue and sell to the venture capitalist so that they end up with 25% share of your company? number of shares (answer in whole integer with no decimals and no blank spaces). b. Now assume that you sold 150 000 new shares to the venture capitalist for $1 million. What was the pre-money valuation of your firm? $ millions (answer in millions, with two decimals, for example 10.45, not 10 450 000) c. Now instead assume that you sold the 150 000 new shares for $3,5 per share to the venture capitalist. What was the post-money valuation of your firm? $ millions (answer in millions, with two decimals, for example 10.45, not 10 450 000)

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_2

Step: 3

blur-text-image_3

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

International Financial Management

Authors: Cheol S. Eun

5th Edition

0071181148, 9780071181143

More Books

Students also viewed these Finance questions