Question: Mr. Smith has some technology and an idea and he attracts an investor. They agree on three points: they will incorporate the venture, the

Mr. Smith has some technology and an idea and he attracts an

Mr. Smith has some technology and an idea and he attracts an investor. They agree on three points: they will incorporate the venture, the value of the venture is $1 million, and the investor will put in $300,000. What will the ownership percentage be if the $1 million agreed upon represents (i) pre- money valuation; (ii) post-money valuation. Fill in the following table and show your calculations. $1m pre-money valuation $1m post-money valuation Value Value Entrepreneur Investor Total

Step by Step Solution

★★★★★

3.46 Rating (156 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

To solve this question we need to understand the difference between premoney and postmoney valuation ... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Mr Smith owns a small start-up where he will be producing in-house made pharmaceutical products. Mr Smith recently moved from Edmonton, AB to Surrey, BC. He will be setting up his pharmaceutical...

If an entrepreneur has an idea for a themed restaurant based on television game shows, is the idea itself eligible for copyright protection? Why or why not?

An investor is evaluating a venture capital project that will require an investment of $1.4 million. The investor estimates that she will be able to exit the venture successfully in eight years. She...

e Mr. Smith has some technology and an idea and he attracts an investor. They agree on three points: they will incorporate the venture, the value of the venture is $1 million, and the investor will...

6. Mr. Smith has some technology and an idea and he attracts an investor. They agree on three points: they will incorporate the venture, the value of the venture is $1 million, and the investor will...

I need answers to the SpiffyTerm Inc. Case. GRADUATE SCHOOL OF BUSINESS STANFORD UNIVERSITY CASE NUMBER: SM-86 MARCH 2001 SpiffyTerm, Inc.: January 2000 January 1, 2000 was not a party day for the...

Kindly help with these finance questions. Please see attached document below for the questions and solution templates. PROBLEM 8-9 Given Beta Dividend payout ratio EPS for 2007 Stock Price (12/07/06)...

Question 1 The Jumbo Group restaurant chain launched its initial public offering (IPO) in October 2015. As a financial analyst of Tiger Investment Fund, your boss has requested for you to brief her...

1. What are the advantages and disadvantages of Rosetta Stone going public? 2. What do you think the current value of a share of Rosetta Stone is (at the time of the case)? Justify your valuation on...

1. Texas Roadhouse (TXRH) is rapidly expanding into new markets and had sales of $1,263M in 2012. Suppose you expect sales to grow at a 15% rate in 2013, but this rate will slow by 2% per year to a...

A manufacturer of mens underwear claims that 93 percent of the products are of the best quality, 6 percent are seconds, and only 1 percent are defective. To test this claim, 500 garments selected at...

. Plumbers & Steamfitters Local 773 Pension Fund sued Canadian Imperial Bank of Commerce and four of its officers on the grounds that they misled investors about CIBC's exposure to fixed-income...

Governmental auditing, in addition to including audits of financial statements, often include audits of efficiency, effectiveness, and: ( 1 ) Adequacy ( 2 ) Evaluation ( 3 ) Accuracy ( 4 ) Compliance

Hendricks Corporation purchased trading investment bonds for $50,000 at par. At December 31, Hendricks received annual interest of $2,000, and the fair value of the bonds was $47,400. Prepare...

In the two-dimensional body illustrated, the gradient at surface A is found to be T/y = 30 K/m. What are T/y and T/x at surface B? Insulation B, TB = 100C 1m k = 10 W/m-K +2 m-- A, TA = 0C %3D

Evaluating an Ethical Dilemma: Earnings, Inventory Purchases, and Management Bonuses Micro Warehouse was a computer software and hardware online and catalog sales company. * A Wall Street Journal...

Target rate of return on investment activity-based costing. Electronic Arts (EA) distributes vide games to retail stores and video-game parlors. It has a simple business model: Order the video games,...

Flexible budget. Conner Companys budgeted prices for direct materials, direct manufacturing labor, and direct marketing (distribution) labor per attache case are $40, $8, and $12, respectively. The...

According to the U.S. Supreme Court, overcrowding in prison constitutes cruel and unusual punishment. Question 16 options: True False

Hello could you please answer the following questions and give steps as to how you came to these answers and how to solve them for the correct answer, I'm having difficulty with these review...

2. Obviously, to verify whether the loan is feasible or not, you need to project the financial statements based on the business strategy you discussed with the company. So, mention the assumptions...

Hi I think I have the answer but I would like a second opinion. The question is: Using the theory of co-opetition (value net), explain what/who is likely to be in Taser's value net. (Who are they?)...

Read the following Case Process management: making complex business This case gives a modern perspective on approaches to improve business processes using information systems. It summarises the...

Kidsjoy Ltd specializes in the production of robotic toys. The company started in 2012 and has performed soundly over the last ten years. However, in the past two years, the robotic toy making...

i have to calculate CASH FLOW DOL FOR 2014 AND 2015 for these two companies and need to state why there are significant differences in the DOL between the companies? Annual Report GUD Holdings...