s fallen on hard times and receives a $6M Se r 6M shares at $1 per share. ck pool have claims on 3M shares of commor we will use the term "employees" to mean s broad-base weighted-average antidilution pr
s fallen on hard times and receives a $6M Se r 6M shares at $1 per share. ck pool have claims on 3M shares of commor we will use the term "employees" to mean s broad-base weighted-average antidilution pr
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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
Transcribed Image Text:Suppose EBV makes a $6M Series A investment in Newco for 1M shares at $6 per
share.
One year later, Newco has fallen on hard times and receives a a $6M Series B
financing from Talltree for 6M shares at $1 per share.
The founders and the stock pool have claims on 3M shares of common stock.
Going forward, for brevity we will use the term "employees" to mean "founders and
the stock pool".
Suppose that Series A has broad-base weighted-average antidilution protection.
What is the postmoney valuation?
$5M
$9M
$11M
$7M
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