What is the percent ownership of our venture

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Question - A potential investor is seeking to invest $500,000 in a venture, which currently has 1,000,000 shares held by its founders, and is targeting a 50% return five years from now. The venture is expected to produce half a million dollars in income per year at year 5. It is known that a similar venture recently produced $1,000,000 in income and sold shares to the public for $10,000,000.

a. What is the percent ownership of our venture that must be sold in order to provide the venture investor's target return?

b. What is the number of shares that must be issued to the new investor in order for the investor to earn his target return?

c. What is the issue price per share?

d. What is the pre-money valuation?

e. What is the post-money valuation?

Reference no: EM132101471

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