Assuming That This Is the Venture Capitalist's First Investment in Your

question 3

Multiple Choice

Assuming that this is the venture capitalist's first investment in your firm,the post-money valuation of the angel investor's shares are closest to:

• A)$12.5 million
• B)$4.0 million
• C)$5.0 million
• D)$2.5 million

Analyze the determination of a firm's value under different capital structures and the impact of leverage.

Identify direct bankruptcy costs and their components.

Distinguish between the direct and indirect costs of bankruptcy.

Grasp the concept of the optimal capital structure and its relation to bankruptcy costs and firm value.

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Definitions:

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