Question
A potential investor is seeking to invest $500,000 in a venture, which currently has 1,000,000 million shares held by its founders, and is targeting a
A potential investor is seeking to invest $500,000 in a venture, which currently has 1,000,000 million shares held by its founders, and is targeting a 50% return five years from now. The venture is expected to produce half a million dollars in EBITDA per year at year 5. It is known that a comparable venture recently produced $1million in EBITDA and went public for $10 million valuation. What is the value of the venture in year five using xComps (direct capitalization)?
The answer is 5mill, but I do not know how to get that. Please provide the work!
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