Fundamentals of Corporate Finance (4th Edition) (Berk, DeMarzo & Harford, The Corporate Finance Series)
Fundamentals of Corporate Finance (4th Edition) (Berk, DeMarzo & Harford, The Corporate Finance Series)
4th Edition
ISBN: 9780134475561
Author: Jonathan Berk, Peter DeMarzo, Jarrad Harford
Publisher: PEARSON
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Chapter 14, Problem 5P
Summary Introduction

Pre-money valuation:

Pre-money valuation of a firm can be defined as the valuation of a firm or asset before an investment or financing occurs. When an investment adds cash to a firm, the firm is ought to have different valuations both before the investment and after the investment.

Post-money valuation:

Post-money valuation of a firm can be defined as the value of the old and the new shares offered at the same price at which the new equity is sold. The post-money valuation of a firm can be determined by adding the pre-money valuation of the firm and the investment. The pre-money valuation of the firm refers to the firm’s value before the investment funding round.

To determine:

The fractions of the firm Series B, C, and D investors own in the firm.

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