Benjamin Garcia\'s start-up business is succeeding, but he needs $209,000 in add

Question

Benjamin Garcia's start-up business is succeeding, but he needs $209,000 in additional funding to fund continued growth. Benjamin and an angel investor agree the business is worth $836,000 and the angel has agreed to invest the $209,000 that is needed. Benjamin presently owns all 37,000 shares in his business. Because the stock will be sold directly to an investor, there is no spread; the other flotation costs are insignificant.

Questions:

1) What is a fair price per share? Round your answer to the nearest cent.

2) How many additional shares must Benjamin sell to the angel? Round your answer to the nearest whole.

Explanation / Answer

1.Since the worth of the business is 836,000 and Benjamin owns 37,000 shares, the fair price per share is 836000/37000 = $22.59

2. Since the price per share is 22.59 and the additional capital required to be raised is 209,000. The additional shares Benjamin has to sell to Angel is 209,000/22.59 = 9250 shares

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.