Entrepreneur with zero initial wealth has a project with a market value (MV) of 400. int rate=0.2

Assume "PCM" so NO DIFFERENCE BETWEEN DEBT AND EQUTY, also assume no taxes

Entrepreneur needs 250 TL at t1 to implement the project. Rana gives our entrepreneur 250TL and gets a certain number of shares in return

Suppose 400 shares are issued which represent this MV (=market value)

a) What will be the price of 1 share, s(1)=

b) How many shares does Rana receive?

c) What percentage of the total market value of 400TL is contributed by Rana?

d) What percentage of the total market value of 400TL is contributed by the entrepreneur?

e) How many of the 400 shares does the entrepreneur deserve?

f) What is the value of the project for the entrepreneur?

O P Y Z D M N T U V W 1 Answer the questions highlighted by YELLOW. In each case give a numerical answer and BRIEFLY explain X stands for operating revenue=revenue minus operating costs. Thus X(2) means operating revenue of time2 2 3 Entrepreneur with zero initial wealth has a project with a market value (MV) of 400. int rate=0.2 X(2) X(3) X(4) X(5) Assume "PCM" so NO DIFFERENCE BETWEEN DEBT AND EQUITY, also assume no taxes 4 Total Project Payoffs X 120 144 172,8 207,36 5 t2 t3 t4 t5 r=0.2 6 MV of project at t1 (120/1.2) (144/1.242) (172.8/1.213 (207.36/1.244) 7 equals sum of: 100 100 100 100 400,00 sum= Suppose 400 shares are issued which represent this MV (=market value) 8 a) What will be the price of 1 share, s(1)= 250 TL investment in the capital market generates the 9 Entrepreneur needs 250 TL at ti to implement the project. Rana gives our entrepreneur 250TL following payoffs 50 50 50 300 MV of 250 TL invested in the capital market at 10 and gets a certain number of shares in return 20%, in time=1 is (50/1.2) 50/(1.242) 50/(1.243) 300/(1.2014) 11 equals sum of: 41,66666667 34,72222222 28,9351852 144,6759259 250,00 sum= b) How many shares does Rana receive? 12 13 14 c) What percentage of the total market value of 400TL is contributed by Rana? 15 16 d) What percentage of the total market value of 400TL is contributed by the entrepreneur? 17 18 e) How many of the 400 shares does the entrepreneur deserve? 19 20 f) What is the value of the project for the entrepreneur? 21 O P Y Z D M N T U V W 1 Answer the questions highlighted by YELLOW. In each case give a numerical answer and BRIEFLY explain X stands for operating revenue=revenue minus operating costs. Thus X(2) means operating revenue of time2 2 3 Entrepreneur with zero initial wealth has a project with a market value (MV) of 400. int rate=0.2 X(2) X(3) X(4) X(5) Assume "PCM" so NO DIFFERENCE BETWEEN DEBT AND EQUITY, also assume no taxes 4 Total Project Payoffs X 120 144 172,8 207,36 5 t2 t3 t4 t5 r=0.2 6 MV of project at t1 (120/1.2) (144/1.242) (172.8/1.213 (207.36/1.244) 7 equals sum of: 100 100 100 100 400,00 sum= Suppose 400 shares are issued which represent this MV (=market value) 8 a) What will be the price of 1 share, s(1)= 250 TL investment in the capital market generates the 9 Entrepreneur needs 250 TL at ti to implement the project. Rana gives our entrepreneur 250TL following payoffs 50 50 50 300 MV of 250 TL invested in the capital market at 10 and gets a certain number of shares in return 20%, in time=1 is (50/1.2) 50/(1.242) 50/(1.243) 300/(1.2014) 11 equals sum of: 41,66666667 34,72222222 28,9351852 144,6759259 250,00 sum= b) How many shares does Rana receive? 12 13 14 c) What percentage of the total market value of 400TL is contributed by Rana? 15 16 d) What percentage of the total market value of 400TL is contributed by the entrepreneur? 17 18 e) How many of the 400 shares does the entrepreneur deserve? 19 20 f) What is the value of the project for the entrepreneur? 21