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Consider the following information for questions 1, 2, 3 and 4: The founders of a startup...

Consider the following information for questions 1, 2, 3 and 4:

The founders of a startup company have 5 million shares of common stock. To raise much needed capital the company goes through a Series A funding round. The founders expect to raise $2 million from the venture capitalists who in exchange ask for a 25 percent equity stake in the company. What is the pre-money valuation of the company?

$2.5 million

$4 million

$6 million

$8 million

$10.5 million
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