You Founded Your Own Firm Three Years Ago

question 88

Multiple Choice

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 4 million newly issued shares in return. After the venture capitalist's investment, the post-money valuation of your shares is closest to ________.

• A) $2.5 million
• B) $6.3 million
• C) $2.0 million
• D) $1.3 million

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Definitions:

Self-Sufficient

The ability of an individual, household, or community to meet its own needs without external aid.

Efficient Grower

An agricultural producer who can produce goods at a lower cost and with greater productivity compared to others.

Trade

The exchange of goods, services, or both between two or more parties, either within a country or internationally.

Resource Scarcity

A situation where resources are limited in availability and cannot satisfy all uses and desires.