11.

a.)

Assume that an investor expects 18X their investment into a company.

Assume the post money exit valuation of a company is going to be $3.6 Million.

Assume that the investor's investment into the company is going to be $130,000. Assume the company will likely have 14 employees at the point of the liquidation event. According to the investor's expectations, at the point when the investor invests their money, what proportion of the company will the investor own?

a.65%

b.35%

c.50.5%

d.18%

e.3.6%

b.)

Which of following regarding term sheets is correct?

a.The investor will not be able to access information regarding sales or strategies of the company.

b.None of these answers are correct.

c.The company owner is typically in a stronger negotiating position regarding the details of the terms.

d.The company owner will never be expected to specify what they are going to do with the proceeds of the deal.

e.The entrepreneur will always retain full control of choosing key employees of the company going forward from the terms being accepted by both the investor and entrepreneur.

f.The investor will not be allowed to request or express interest in board representation.

g.An investor providing you with a term sheet represents a binding agreement between your company and the investor.

c.)

How much should you reasonably pay to buyout a firm with the following cash flows , assuming an opportunity cost of capital of 12% and an exit value in year 3 of $96,000?

year 1 2 3

cash flow 32,000 32,000 32,000

a.$76,859

b.$145,190

c.$192,000

d.None of these answers are correct.

e.$96,000