Benjamin Garcia's start-up business is succeeding, but he needs $210,000 in additional funding to fund continued growth. Benjamin and an angel investor agree the business is worth $840,000 and the angel has agreed to invest the $210,000 that is needed. Benjamin presently owns all 37,000 shares in his business. Required:
What is a fair price per share and how many additional shares must Benjamin sell to the angel?

Missing word "Because the stock will be sold directly to an investor, there is no spread; the other flotation costs are insignificant"

Fair Price is based on the current valuation of business and that is $840,000 in this case.

Fair Price = Current Value of Business/Number of Outstanding Shares

Fair Price = $840,000 / 37,000 shares

Fair Price = 22.7027027

Fair Price = $22.70.

Number of Additional Shares = Additional Funding Required/Fair Price Per Share =

Number of Additional Shares = $210,000 / $22.70

Number of Additional Shares = 9251.101321585903

Number of Additional Shares = 9251 shares

So, since additional funding of $210,000 is required, Benjamin will have to sell 9,251 shares as additional shares to the Angel.

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