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Determine the Series B Preferred stock price per share to be used in selling the $10 million in Series B stock?

Price:
$16.99
SKU:
701539


Product Description

Facts: New Financing for XYZ Company XYZ wants to raise $10 million in equity financing by selling Series B Preferred stock
Pre-financing valuation is $20 million
Pre-financing shares outstanding:
o Common stock
5,000,000
o Employee stock option pool-common stock
2,000,000
o Series A Preferred stock
3,000,000
Total pre-financing shares
10,000,000 Exercise:
1. Determine the Series B Preferred stock price per share to be used in selling the $10 million in
Series B stock? How many shares of Series B stock will be sold to raise the $10 million?
2. Prepare a capitalization table that shows the pre-financing shares and per cent of ownership by
class of stock and the post-financing shares and percent of ownership by class of stock after the
$10 million in Series B Preferred stock is sold.
3. What is the dilution percentage incurred by shareholders holding the Common and Series A
classes of stock as a result of the $10 million in Series B financing?


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