Answer:
(a) 1,370,000 shares
(b) 42.19%
Explanation:
Given that,
Shares in a restaurant chain venture = 1,000,000 shares
Price of each share = $1.00
(a) To raise the additional $1,370,000:
Shares will you need to sell:
= Additional amount ÷ Price of each share
= $1,370,000 ÷ $1.00
= 1,370,000 shares
(b) No. of Shares After investment:
= Shares need to sell + Shares in a restaurant chain venture
= 1,370,000 + 1,000,000
= 2,370,000 shares
Therefore, the fraction of the firm will you own after the VC investment:
= (Shares in a restaurant chain venture ÷ No. of Shares After investment) × 100
= (1,000,000 ÷ 2,370,000) × 100
= 0.4219 × 100
= 42.19%
