Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A company investor wants to invest $2.5 million in the Company Export Import that you have which has been in operation for the past seven

A company investor wants to invest $2.5 million in the Company Export Import that you have which has been in operation for the past seven months. You do not expect to make a profit until the 5th year, and when your net income is expected to $5,000,000. For Common Stock, Export-Import where comparable companies are currently it is traded on the free market at $50 per share. Net profit exportimportlast year was $500,000 and the company has 200,000 shares of common stock circulated. You are asked: Apply the VC method to determine the value of the Export Import Corporation at the end five years. If a venture capitalist wants a compound annual rate of return 30% for a similar investment, what is the present value of the Export Company's business Your imports? What percentage ownership of your Import Export Company business should you give to a VC firm for a $2.5 million investment? Based on question C, give your analysis whether the company should continue cooperation with these investors or you will choose another investment source for example by borrowing from the bank. Give your analysis, opinion and reasons.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

MDDL And The Quest For A Market Data Standard Explanation Rationale And Implementation

Authors: Martin Christopher Sexton

1st Edition

0750668393,0080551777

More Books

Students also viewed these Finance questions