Question

Assume you own 370 shares of a firm with a total of 1,125 shares outstanding. The total value of the firm is currently estimated to be $543,000. A year later the firm sells 410 new shares to a venture capital fund for $10,200,000. The value of the firm is now estimated to be $________.

Answer 1

The value of the firm is estimated to be $6,660.13 per share.

Step-by-step explanation:

Assuming the initial value of the firm is $543,000 and there are 1,125 shares outstanding, we can calculate the value per share as follows: $543,000 / 1,125 = $482.67.

After selling 410 new shares to a venture capital fund for $10,200,000, the total number of outstanding shares becomes 1,125 + 410 = 1,535.

To calculate the new value of the firm, we divide the total value by the new number of outstanding shares: $10,200,000 / 1,535 = $6,660.13 per share.

Therefore, the value of the firm is now estimated to be $6,660.13 per share.