Question 6- An entrepreneur founded his company using $300,000 of his own money, issuing himself 300,000...
Question 6-
An entrepreneur founded his company using $300,000 of his own money, issuing himself 300,000 shares of stock. An angel investor bought an additional 100,000 shares for $250,000. The entrepreneur now sells another 450,000 shares of stock to a venture capitalist for $1.0 million. What is the post-money valuation of the company?
A. $2,172,222
B. $944,444
C. $1,888,889
D. $1,038,889
Homework Answers
C. $1,888,889
Value of 450,000 shares is $ 1 million.
Value of 1 share is = 1 million / 450,000 = $2.2222222
Total number of shares = 450,000 + 300,000 + 100,000 =850,000
Total value of shares = 2.2222222 * 850,000 =$1,888,889
Post money valuations of company is 1,888,889 dollars
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