Question

An entrepreneur founded his company using $250,000 of his own money, issuing himself 200,000 shares of stock. An angel investor bought an additional 100,000 shares for $200,000. The entrepreneur now sells another 400,000 shares of stock to a venture capitalist for$2 million. What is the post-money valuation of the company?

Answer 1

$3,500,000

Step-by-step explanation:

the total number of shares

= 200000 + 100000 + 400000

= 700000 shares

value of 400000 shares = 2 million dollars

such that 1 share = 2 million/400000

= 5

total value of the shares = 5 * 700000

= $3,500,000

therefore we conclude that the post money valuation of this company is $3,500,000