Suppose EBV makes a $6M Series A investment in Newco for 1M shares at $6 pershare.One year later, Newco has fallen on hard times and receives a a $6M Series Bfinancing 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 andthe stock pool".Suppose that Series A has broad-base weighted-average antidilution protection.What is the postmoney valuation?$5M$9M$11M$7M

Series A Investment:Investment Amount: $6MNumber of Series A Shares: 1MSeries A Price per Share: $6

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

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter15: Dividend Policy

Section: Chapter Questions

Problem 5P

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Question

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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