Luma, a startup company, provides a platform for people to host virtual classes,record live shows, educate, and find their communities via Zoom. Suppose afounder owns 100% of the startup and currently has 0.5 million shares. Thefounder plans to raise $3 million from Venick (a venture capital firm investing intechnology and healthcare companies) in Series A financing with the pre-moneyvaluation of $10 million. An option pool of 15% is reserved for future employees.Given the information, find the Price/shares paid by Venrock followingcapitalization table AFTER series A.$2.7$7.2$12.5O $16.1

Problem:Calculate the price per share paid by Venrock after Series A financing.Given…

Answered: Luma, a startup company, provides a…

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

Problem 1PS

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Three friends are starting a home painting business while they are in college. One of the friends is from a wealthy family and will finance the startup costs – website development, advertising and purchasing the paint, in return for a 50% share of the business. The other two friends will each own 25% of the business. They may have two or three employees who will be paid by the job and will not own any of the business. They expect to distribute to themselves all the earnings of the business every month. Once they graduate from college, they expect to leave the business and have their brothers and sisters take over. They have no plans to grow the business beyond one or two projects at a time. Which form of ownership should they use as they start up this business?
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Finding the WACC. Monica is the CFO of Cooking for Friends (CFF) and uses the pecking order hypothesis philosophy when she raises capital for company projects. Currently, she can borrow up to $450,000 from her bank at a rate of 7.75%, float a bond for $800,000 at a rate of 10%, or issue additional stock for $1,500,000 at a cost of 15%. What is the WACC for CFF if Monica chooses to invest A. $900,000 in new projects? B. $200,000 in new projects? C. $2,750,000 in new projects?
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