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It is industry standard to value a business using a 25% discount rate. You've forecasted that your company, Sweet Tweets Techs, Inc., a social media
It is industry standard to value a business using a 25% discount rate. You've forecasted that your company, Sweet Tweets Techs, Inc., a social media analytics SaaS company, will enjoy expected cash flows for the next five years as follows: Year Amount 2021 $350,00 2022 $375,000 2023 $425,000 2024 $475,000 2025 $500,000 2026 $525,000 **Note: the following present value factors for a 25% discount rate: 0.8000 (n=1), 0.6400 (n=2), 0.5120 (n=3), 0.4096 (n=4), 0.3277 (n = 5). Calculate the equity value of your business using the discounted cash flow method, using a 25% discount rate, and assuming that the expected cash flow of the last forecasted year will stabalize and continue to grow in perpetuity by 2% per year (show all calculations and work in your answer response). Next, answer the following questions: A. If an investor approaches you and wants to invest $180,000 in Sweet Tweets Tech, Inc., what percentage ownership of the company might this investment represent? Justify your answer with all work. B. If you wish to sell 60% ownnership interest in Sweet Tweets Tech, Inc. to your business partners, what would likely be the numerical basis for your asking price? Justify your
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