You Founded Your Own Firm Three Years Ago

question 82

Multiple Choice

You founded your own firm three years ago. You initially contributed $200,000 of your own money and in return you received 3 million shares of stock. Since then, you have sold an additional 2 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. Suppose you sold the 2 million shares to the angel investor for $500,000. What was your percentage ownership in the company immediately following the angel investor's investment?

• A) 50%
• B) 40.0%
• C) 60.0%
• D) 100%

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Definitions:

Current Flow

The movement of electrical charge through a conductor, typically measured in amperes (amps), fundamental to electrical circuits and devices' operation.

Ohm's Law

A fundamental principle in electricity that states the current through a conductor between two points is directly proportional to the voltage across the two points.

Total Circuit Resistance

The sum of all resistances within an electrical circuit, affecting the overall current flow and performance.

Ohm's Law

A fundamental principle in electricity stating that the current through a conductor between two points is directly proportional to the voltage across the two points and inversely proportional to the resistance between them.