Fundamentals of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
Fundamentals of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
9th Edition
ISBN: 9781259722615
Author: Richard A Brealey, Stewart C Myers, Alan J. Marcus Professor
Publisher: McGraw-Hill Education
Question
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Chapter 15, Problem 1QP

a.

Summary Introduction

To calculate: The number of shares to be sold to raise $500,000.

a.

Expert Solution
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Explanation of Solution

Company's needed capital = $500,000Price per share = $0.40No of shares to be sold =(500000/0.40)=$12,50,000.

b.

Summary Introduction

To calculate: The fraction of the firm owned by the person after venture capital investment.

b.

Expert Solution
Check Mark

Explanation of Solution

The number of shares owned by the person = 10,00,000The number of shares owned by the venture capital = 12,50,000The share of the person's ownership in the company = (1000000(1000000+1250000))=44.4%

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