Use the Information for the Question(s)below

question 23

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.
-After the venture capitalist's investment,the post-money valuation of your shares is closest to:

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

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Definitions:

Disaffirm

The legal act of denying or rejecting the validity of a contract or agreement, especially by a party who was minor at the time of entering the contract.

Public Policy

Principles and standards considered by the government in the administration of justice and the enactment of laws, reflecting the social and economic priorities of the community.

Intoxication

The state of being impaired or influenced by the consumption of alcohol or drugs.

Ratification

The act of officially approving or confirming an agreement or action, making it valid and binding.