$($Discount rates$)$ Calculate the discount rate consistent with a cap rate of

growth rate of $6\mathrm{.}0\%$

A Estimate the terminal value of the venture at the end of year $5$ if the discount rate at that time is

$20\mathrm{.}0\%$

Discount rate

B Show your answer if cap rate drop to would change if the cap rate dropped to

$10\mathrm{.}0\%$ and the growth rate declined to $5\mathrm{.}0\%$

Discount rate

$($ Venture present Values$)$ A venture investor wants to estimate the value of a venture

The venture is not expected to produce any free cash flows until the end of year $6$ when the

cash flow is estimated at $$2,000,000$ and is expected to grow at a

rate per year into the future

A Estimate the terminal value of the venture at the end of year $5$ if the discount rate

at the time is $20\mathrm{.}0\%$

TV

B Determine the present value of the venture at the end of year $0$ if the venture investor wants a

$40\mathrm{.}0\%$ annual rate of return on the investment

Present Value

Pre$-$money and post money valuations$)$ Suppose your are considering a venture conduction a

current financing round involving an issue of $100,000$ new shares at

the existing number of shares outstanding is $200,000$ What are the related pre$-$money and post

money valuations?

Share price $$-$

Pre Money $$-$

Post money $$-$

Proceeds $$-$

Present Values and Investor Owner $)$ Vail venture investors, LLC is trying to decide how

much percent equity ownership in Black Hawk Products, inc. it will need in exchange for a

investments.

Vail has a target compound rate of return of $25\%$ on venture investment LIKE Black Hawk

Depending on the success of products currently under development, Vails investment in Black Hawk

could turn out to be a complete failure, barely surviving or wildly successful

Vale assigns probabilities of $0\mathrm{.}20\mathrm{.}50\mathrm{.}3$

Following are the $3$ cash flow scenarios or outcomes for the Black Hawk product invests that

Vail venture expects to exit at the end of five years

Out come yr$.1$ Yr$.2$ yr$.3$ yr$.4$

Failure

surviving

successful

A Calculate present value

Outcome

PV Failure

PV surviving

PV successful

B Calculate the weighted average of the present values for the three scenario

What is the total equity value for the Black hawk products venture

Weighted Avg

C

Determine the acquired percentage of final ownership of Black haw products that

Vail venture investors would need for its $$5,000,000\mathrm{.}00$ proposed investment

Amount invested

firm value

Equity percentage #DIV$/0!$