Use the Information for the Question(s)below

question 105

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.
-Suppose you sold the 1.25 million shares to the angel investor for $500 000. What was the post-money valuation of your shares immediately following the angel investor's investment?

• A)$2.0 million
• B)$500 000
• C)$1.0 million
• D)$2.5 million

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Definitions:

Substantial Injury

Significant physical, financial, or emotional harm caused to a person or property that may be grounds for legal action.

Family or Medical Leave

Authorized absence from work, protected by law, for family or health-related reasons without risk of losing employment.

Family and Medical Leave Act

A U.S. federal law that requires covered employers to provide employees with job-protected and unpaid leave for qualified medical and family reasons.

Military Service

A period of time spent serving in the armed forces of a country.