You Want to Open a Business That Will Require You

question 47

Multiple Choice

You want to open a business that will require you to raise $5 million . If undertaken, the present value of the business is $20 million. If potential equity investors believe that you will
Behave opportunistically and award yourself an excessive salary of $2,000,000, what
Percentage ownership will they require in order to invest the $5 million in your idea? Round
Your answer to the nearest tenth of a percent.

• A)25.0%
• B)27.8%
• C)33.3%
• D)15.0%

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Definitions:

Cognitive Capacities

The range of mental abilities that encompass reasoning, memory, attention, and language and lead to consciousness and the ability to acquire knowledge.

Object Permanence

The understanding that objects continue to exist even when they cannot be seen, heard, or otherwise sensed.

Cognitive Development

The study of how thinking, problem solving, and intelligence evolve as individuals grow from infancy through adulthood.

Volume

A measurement of the amount of space occupied by a three-dimensional object or substance.