Question

Brian needs major financing for the educational software company he has founded. he is offering an equity stake of 5% in exchange for an investment of $500,000. at what amount is brian valuing his business?

a. $5,000,000
b. $25,000,000
c. $2,500,000
d. $10,000,000

Answer 1

Brian's company is valued at $10,000,000 if he is offering a 5% equity stake for $500,000. This valuation is found by dividing the investment amount by the equity percentage.

Step-by-step explanation:

Brian is valuing his educational software company. If he is offering a 5% equity stake in exchange for an investment of $500,000, we calculate the total valuation of the company by dividing the investment amount by the percentage of equity offered. Therefore, the company is valued at $10,000,000 because $500,000 is 5% of $10,000,000. This means the correct choice from the provided options is d. $10,000,000.