Benjamin Garcia's start-up business is succeeding, but he needs $200,000 in additional funding to fund continued growth

Finance Sep 06, 2020

Benjamin Garcia's start-up business is succeeding, but he needs $200,000 in additional funding to fund continued growth. Benjamin and an angel investor agree the business is worth $800,000 and the angel has agreed to invest the $200,000 that is needed. Benjamin presently owns all 40,000 shares in his business. What is a fair price per share and how many additional shares must Benjamin sell to the angel? Because the stock will be sold directly to an investor, there is no spread; the other flotation costs are insignificant.

Expert Solution

Fair price per share = $20 per share

Number of additional shares = 10,000 shares

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