Use the Information for the Question(s)below

question 2

Multiple Choice

Use the information for the question(s) below.
You founded your own firm three years ago.You initially contributed $200,000 of your own money and in return you received 2 million shares of stock.Since then,you have sold an additional 1 million shares of stock to angel investors.You are now considering raising capital from a venture capital firm.This venture capital firm would invest $5 million and would receive 2 million newly issued shares in return.
-Assuming that this is the venture capitalist's first investment in your firm,what percentage of the firm will you own?

• A)50%
• B)40%
• C)33%
• D)25%

---

Definitions:

Machine-hours

A measure of production time, calculated by the number of hours a machine is operated in the production of goods.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to products, based on a planned level of activity.

Direct Labor-hours

The sum of hours logged by workers directly engaged in creating products.

Manufacturing Overhead

Manufacturing overhead encompasses all costs of manufacturing beyond direct materials and direct labor, including expenses like factory equipment depreciation and quality control.