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5. A company is raising their Series A round with a pre-money valuation of $4M and 1,000,000 in outstanding shares. They are raising a $1M round, but they have an issued convertible note that will convert. The note's terms are as follows: $1M Principle Amount $10M Valuation Cap 20% Discount If using the Pre-Money Conversion Method, how many shares do the noteholders purchase and would they convert at a Discount or Valuation Cap? Discount; 454,545 shares Discount; 363,636 shares Val Cap; 363,636 shares Val Cap: 454,545 shares

5. A company is raising their Series A round with a pre-money valuation of $4M and 1,000,000 in outstanding shares. They are raising a $1M round, but they have an issued convertible note that will convert. The note's terms are as follows: $1M Principle Amount $10M Valuation Cap 20% Discount If using the Pre-Money Conversion Method, how many shares do the noteholders purchase and would they convert at a Discount or Valuation Cap? Discount; 454,545 shares Discount; 363,636 shares Val Cap; 363,636 shares Val Cap: 454,545 shares

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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5. A company is raising their Series A round with a pre-money valuation of $4M and 1,000,000 in outstanding shares. They are raising a $1M round, but they have an issued convertible note that will convert. The note's terms are as follows: $1M Principle Amount $10M Valuation Cap 20% Discount If using the Pre-Money Conversion Method, how many shares do the noteholders purchase and would they convert at a Discount or Valuation Cap? Discount; 454,545 shares Discount; 363,636 shares Val Cap; 363,636 shares Val Cap: 454,545 shares
Transcribed Image Text:5. A company is raising their Series A round with a pre-money valuation of $4M and 1,000,000 in outstanding shares. They are raising a $1M round, but they have an issued convertible note that will convert. The note's terms are as follows: $1M Principle Amount $10M Valuation Cap 20% Discount If using the Pre-Money Conversion Method, how many shares do the noteholders purchase and would they convert at a Discount or Valuation Cap? Discount; 454,545 shares Discount; 363,636 shares Val Cap; 363,636 shares Val Cap: 454,545 shares
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