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...

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.