Use the Information for the Question(s)below

question 6

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 the venture capitalist own?

• A)50%
• B)40%
• C)25%
• D)33%

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Definitions:

Balance Sheet

A financial statement that provides a snapshot of a company's financial condition at a specific point in time, showing assets, liabilities, and shareholders' equity.

Organizational Goals

Objectives or targets that an organization aims to achieve over a specific period, guiding its strategic planning and actions.

Strategic

Relating to the identification of long-term or overall aims and interests and the means of achieving them.

Operational

Pertains to the day-to-day activities and tasks necessary for running a business or organization, focusing on efficiency and effectiveness.