Ethelbert.com is a young software company owned by two entrepreneurs. It currently needs to raise $1,746,400 to support its expansion plans. A venture capitalist is prepared to provide the cash in return for a 40% holding in the company. Under the plans for the investment, the VC will hold 23,600 shares in the company and the two entrepreneurs will have combined holdings of 35,400 shares. a. What is the total after-the-money valuation of the firm? (Enter your answer in dollars not millions.) b. What value is the venture capitalist placing on each share?

Corporate Fin Focused Approach
5th Edition
ISBN:9781285660516
Author:EHRHARDT
Publisher:EHRHARDT
Chapter7: Valuation Of Stocks And Corporations
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Ethelbert.com is a young software company owned by two entrepreneurs. It currently needs to raise $1,746,400 to support its expansion plans. A venture capitalist is prepared to provide the cash in return for a 40% holding in the company. Under the plans for the investment, the VC will hold 23,600 shares in the company and the two entrepreneurs will have combined holdings of 35,400 shares.

 

a. What is the total after-the-money valuation of the firm? (Enter your answer in dollars not millions.)

 

 


b. What value is the venture capitalist placing on each share?

 

 

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