Samantha and John agree both to the participating preferred and that the company will probably need...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Samantha and John agree both to the participating preferred and that the company will probably need another round of financing in addition to the current $5 million. Samantha believes that New Venture will need an additional $3 million in equity at the beginning of year 3. While she will require a 50% return, Samantha feels that round-two investors will probably have a hurdle rate of only 30%, and will invest in simple convertible preferred. As before, the management option pool (created after Samantha's Series A investment but before the $3M Series B investment) should have the ability to own a 15% share of the company by the end of year 5.² Based on this new information, what share of the company should Samantha seek today? What price per share should she be willing to pay? b. What share of the company will the Round 2 investors seek? What price per share will they be willing to pay? Create a capitalization table to depict the pre-money and post-money valuation, the number of shares and the share price: (i) Before Samantha Jones' investment (ii) after Samantha Jones' investment (iii) After the Round 2 investors' investment. a. C. Samantha and John agree both to the participating preferred and that the company will probably need another round of financing in addition to the current $5 million. Samantha believes that New Venture will need an additional $3 million in equity at the beginning of year 3. While she will require a 50% return, Samantha feels that round-two investors will probably have a hurdle rate of only 30%, and will invest in simple convertible preferred. As before, the management option pool (created after Samantha's Series A investment but before the $3M Series B investment) should have the ability to own a 15% share of the company by the end of year 5.² Based on this new information, what share of the company should Samantha seek today? What price per share should she be willing to pay? b. What share of the company will the Round 2 investors seek? What price per share will they be willing to pay? Create a capitalization table to depict the pre-money and post-money valuation, the number of shares and the share price: (i) Before Samantha Jones' investment (ii) after Samantha Jones' investment (iii) After the Round 2 investors' investment. a. C.
Expert Answer:
Answer rating: 100% (QA)
Certainly lets solve this step by step with a clear explanation Well start with Samantha Jones investment Step 1 Samantha Jones Investment Samantha is investing 5 million initially and requires a 50 r... View the full answer
Related Book For
Foundations of Financial Management
ISBN: 978-1259024979
10th Canadian edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
Posted Date:
Students also viewed these finance questions
-
John Thompson, CEO of WVU, Inc., wants to raise $5 million in a private equity in his early stage venture. John projects net income of $11 million in year five (five years from now) and knows that...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
Read the case study "Southwest Airlines," found in Part 2 of your textbook. Review the "Guide to Case Analysis" found on pp. CA1 - CA11 of your textbook. (This guide follows the last case in the...
-
At year-end 2010, 28,879 million represents: A. the funded status of the plan. B. the defined benefit obligation. C. the fair value of the plans assets. Kensington plc, a hypothetical company based...
-
This principle states that the buoyancy force equals the weight of the water displaced by the body (partly or totally submerged). The cylindrical buoy of diameter 60cm in Fig. 42 is floating in water...
-
A voltage regulator is to have a nominal output voltage of \(10 \mathrm{~V}\). The specified Zener diode has a rating of \(1 \mathrm{~W}\), has a \(10 \mathrm{~V}\) drop at \(I_{Z}=25 \mathrm{~mA}\),...
-
Discuss the uses and limitations of the statement of financial position for decision-making purposes.
-
Per GASB standards if a government gives a cash advance to a grantee and the grantee has not yet satised all eligibility requirements, the government would offset its credit to cash with a debit to...
-
Discuss why the Voice of Customer is important. Explain how each phase of QFD is important to meeting the customer's needs
-
A randomized controlled trial comparing two drugs for treating insomnia is said to have 85% power to detect a 20% relative reduction (RR=0.80) in sleep problems nine months following treatment at the...
-
What is the difference between negligence and strict liability in tort law?
-
If the probability density of a random variable is given by \[f(x)= \begin{cases}(k+2) x^{3} & 0
-
List three important challenges in formulating the analysis pattern.
-
List four scenarios, where this pattern can be applied. Use ones that are highlighted in the chapter.
-
What are the classes and patterns involved in defining the stable pattern for analyses?
-
How do you use functional requirements for this chapter?
-
Joseph's company makes and sells scarves, and he has just completed his annual financial analysis for the most recent year-end. The company produces two varieties of scarves: Silk and Cotton. Joseph...
-
Some people argue that the internal control requirements of the Sarbanes-Oxley Act (SOX) put U.S. companies at a competitive disadvantage to companies outside the United States. Discuss the...
-
Bonds issued by the Peabody Corporation have a par value of $1,000, are selling for $890, and have 18 years to maturity. The annual interest payment is 8 percent. Find yield to maturity by combining...
-
What are ADRs?
-
Manpower Electric Company has 7 percent convertible bonds outstanding. Each bond has a $1,000 par value. The conversion ratio is 25, the stock price is $38, and the bonds mature in 16 years. a. What...
-
While you're waiting for the ribs to cook, you muse about the propane tank of your barbecue. You're curious about the volume of propane versus the actual tank size. Find the liquid propane volume...
-
Derive the following conversion factors: (a) Convert a volume flow rate in cubic inches per minute to cubic millimeters per minute. (b) Convert a volume flow rate in cubic meters per second to...
-
Express the following in \(\mathrm{BG}\) units: (a) \(50 \mathrm{~m}^{2}\) (b) \(250 \mathrm{cc}\) (c) \(100 \mathrm{~kW}\) (d) \(5 \mathrm{~kg} / \mathrm{m}^{2}\)
Study smarter with the SolutionInn App