An Entrepreneur Founded His Company Using $200,000 of His Own

question 45

Multiple Choice

An entrepreneur founded his company using $200,000 of his own money, issuing himself 200,000 shares of stock. An angel investor bought an additional 100,000 shares for $150,000. The entrepreneur now sells another 400,000 shares of stock to a venture capitalist for$2 million. What is the post-money valuation of the company?

• A) $1,750,000
• B) $1,925,000
• C) $3,500,000
• D) $4,025,000

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Definitions:

Sales Price

The selling price set for a service or product aimed at consumers.

Contingent Liabilities

Potential liabilities that may occur depending on the outcome of a future event or set of circumstances.

Damage Awards

Monetary compensation determined and ordered by a court for losses or injuries suffered as a result of unlawful actions or negligence by another party.

EPA Fine

A penalty imposed by the Environmental Protection Agency for violations of environmental laws or regulations.