Fin 615.7W2

Entrepreneurial Finance

Spring 2017

Power Water Beverages Inc. (PWBI)

Tasks

1.Use data provided in the accompanying spreadsheet to create common-sized balance sheets and income statements based on the projected data.

2.Compare the common sized data for PWBI to the common sized data for the comparison sample of companies in Case Exhibit 10.

a.How do the common sized data for PWBI compare to that for each company in Exhibit 10?

b.How can you account for differences and/or similarities between PWBI and each of the companies in Exhibit 10?

c.How might the comparison affect your choice of a sample of comparative companies to be used when estimating multiples to be used to value PWBI?

3.Choose an appropriate MVIC ratio to be used to conduct a venture capital valuation of PWBI.The appropriate choice should be based on companies that are most similar to PWBI in terms of their business models and financial structures.

4.Value PWBI using a VC model and assumptions of a venture capital return of 45%.

5.Given the results of your model, estimate the share of equity PWBI would need to give in exchange for raising $950,000 from VC investors.

6.Based on your analysis of the balance sheet, income statement, and cash flow statement, assess the need for the $950,000 and offer an opinion as to whether it is even necessary at this time.

Written submission:

Submit a two-page (maximum) document supporting your choice of a benchmark multiple and the results of your valuation and estimate of the percentage of ownership that would be given in exchange for a $950,000 investment.Be sure to include your opinion as to the need for that amount of funding given their expected cash flow in the future.

Format:Cover page with your name, course name, and assignment name; two written pages of text: single spaced; indent first line of each paragraph; extra space between paragraphs; include table as a PDF object at the end of the written text (do not embed within the text, make it an appendix); make specific references to the table in the paper where appropriate.