Question
A start-up company needs $2 Million funds to finance their growth. A venture capitalist approached the shareholders to provide them with the funds needed but
A start-up company needs $2 Million funds to finance their growth. A venture capitalist approached the shareholders to provide them with the funds needed but the required return per year demanded is 40% for the next 5 years.
Estimated EBITDA of the firm for the current year is $200,000 which is expected to be increased by 30% per year. Estimated EBITDA multiple at the end of year 5 is 20 while the company expects to have $300,000 cash and no interest-bearing debt at that time.
Calculate:
The percentage of ownership to be given to venture capitalist
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started