Use the Information for the Question(s)below

question 30

Multiple Choice

Use the information for the question(s) below.
You founded your own firm two years ago. You initially contributed $250 000 of your own money and in return you received 2.5 million shares of stock. Since then, you have sold an additional 1.25 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 the angel investor's shares is closest to:

• A)$5.0 million
• B)$4.0 million
• C)$3.1 million
• D)$6.5 million

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Definitions:

Life Annuity

An insurance product that guarantees regular payments to the annuitant for life, in exchange for an initial investment.

Term Annuity

An insurance product that pays out income over a fixed period or term, not necessarily for life.

Compounded Monthly

This involves the recalculating of interest on a loan or investment by taking into account both the initial principal and the accumulated interest from previous periods, recalculated on a monthly basis.

Life Annuity

A financial product providing a series of payments at regular intervals for the remainder of the annuitant's life.