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A potential investor is seeking to invest $900,000 in our venture at an expected 32.5% rate of return. The firm currently has 1,000,000 shares held
A potential investor is seeking to invest $900,000 in our venture at an expected 32.5% rate of return. The firm currently has 1,000,000 shares held by the founders. The venture is projected to generate $1,000,000 in income per year over the next 5 years. A comparable firm produced $2,000,000 in income, and has a total market cap of $16,000,000. 1) What is the post-money valuation? (whole dollars) 2) What is the value of the venture in year five using the direct capitalization method? (whole $'s) 3) What is the value of the venture in year five using the direct comparison method? (whole $'s) A potential investor is seeking to invest $900,000 in our venture at an expected 32.5% rate of return. The firm currently has 1,000,000 shares held by the founders. The venture is projected to generate $1,000,000 in income per year over the next 5 years. A comparable firm produced $2,000,000 in income, and has a total market cap of $16,000,000. 1) What is the post-money valuation? (whole dollars) 2) What is the value of the venture in year five using the direct capitalization method? (whole $'s) 3) What is the value of the venture in year five using the direct comparison method? (whole $'s)
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