Answered: What is the price per share (PPS) of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The founders of XMP GmbH have created a successful software as a service platform and are now looking for venture capital to accelerate the growth of the company. Currently, the company is entirely founder-owned and has 10,000.00 shares outstanding. But before they start fundraising, they want their employees to participate in the success story of their business. Therefore, the founders issue shares to an employee share option program (ESOP) so that the entire ESOP represents 20.00% of the ownership of the company. Shortly after that, they receive an offer from the venture capital firm A-Capital. A-Capital offers to invest 4,000,000.00 € at a 16,000,000.00 € pre-money valuation. What is the price per share (PPS) of the round and the total number of shares post-round? 1) The price per share (PPS) equals 1,640.00 €; the total number of shares post-round equals 18,750.00. 2) The price per share (PPS) equals 1,220.00 €; the total number of shares post-round equals 16,525.00. 3) The price per share (PPS) equals 1,280.00 €; the total number of shares post-round equals 15,625.00. 4) The price per share (PPS) equals 1,960.00 €; the total number of shares post-round equals 19,650,00. A) Only (1) is correct B) Only (2) is correct C) Only (3) is correct D) Only (4) is correct

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