FINANCIAL MANAGEMENT: THEORY AND PRACTIC
FINANCIAL MANAGEMENT: THEORY AND PRACTIC
16th Edition
ISBN: 9780357691977
Author: Brigham
Publisher: CENGAGE L
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Chapter 18, Problem 3P
Summary Introduction

To calculate: Fair value of share and number of additional shares to be sold by Company B to Investor A.

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Benjamin Garcia’s start-up business is succeeding, but he needs $200,000in additional funding to fund continued growth. Benjamin and an angelinvestor agree the business is worth $800,000 and the angel has agreed toinvest the $200,000 that is needed. Benjamin presently owns all 40,000shares in his business. What is a fair price per share and how many additional shares must Benjamin sell to the angel? Because the stock will besold directly to an investor, there is no spread; the other flotation costsare insignificant.
Benjamin Garcia's start-up business is succeeding, but he needs $208,000 in additional funding to fund continued growth. Benjamin and an angel investor agree the business is worth $832,000 and the angel has agreed to invest the $208,000 that is needed. Benjamin presently owns all 41,000 shares in his business. Because the stock will be sold directly to an investor, there is no spread; the other flotation costs are insignificant. What is a fair price per share? Do not round intermediate calculations. Round your answer to the nearest cent. How many additional shares must Benjamin sell to the angel? Do not round intermediate calculations. Round your answer to the nearest whole number. shares
Mario and Luigi each own half of a mushroom pizza parlor. They want to expand by purchasing a second brick oven for $30,000. They give Koopa Fund a 10% stake in the pizza parlor in exchange for the necessary capital. From this, we can infer that Luigi must have valued his stake in the business to be worth no more than x. What is x?
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