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:

Single Product

A focus or strategy based on offering one product or a very limited range of products to customers.

Equity

The value of an ownership interest in a company, represented by the portion of the company's assets remaining after liabilities have been subtracted.

Cannibalization

A decrease in the sales, revenue, or market share of an existing product due to the launch of a new product by the same manufacturer.

Grilled Chicken Sandwiches

Sandwiches made with grilled chicken meat as a primary ingredient, often served with toppings and condiments on bread.