Question
I am struggling with the revnue multiplier concept. Can you help me walk through the steps of the following problem? I use an HP10bII financial
I am struggling with the revnue multiplier concept. Can you help me walk through the steps of the following problem? I use an HP10bII financial calculator if that helps.
Cougar Capital is considering investing in DataIntelligence Inc., a hot new tech start-up. The company has only been around for 18 months and has had negative earnings during this time. The company projects that over the next 3 years it will grow significantly, though, and Cougar Capital is looking to invest today to participate in some of that growth. If the company projects revenues of $2.5 million for next year and Cougar Capital's research shows that similar companies have a forward revenue multiplier of 5x, how much would Cougar Capital be willing to pay to own 30% of the company?
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