Question
John Thompson, CEO of NewVenture,Inc. seeks to raise $5 million in equity for his early stage venture in January 2024. NewVenture is a subscription-based software
John Thompson, CEO of NewVenture,Inc. seeks to raise $5 million in equity for his early stage venture in January 2024. NewVenture is a subscription-based software company that has experienced 75% revenue growth over the last year. The company generated $2.5 million of revenue in 2023, with an operating loss pf $450,000. Thompson projects that NewVenture will achieve $30 million in revenue by 2028 (with a constant growth rate in the next 5 years), followed by 5 years of 35% revenue growth (2029-2033), and 3% growth thereafter (2034 and onwards). He also estimates that company will remain unprofitable until 2028, with EBIT margins of -10% on average over the next 5 years (2024-2028), growing over time to an average of 5% in years 6-10 (2029-2033), and 10% thereafter (2034 and onwards).
TheNewVenture has1,000,000 total shares outstanding before the investment. How many new shares should she purchase, and at what share price?
can you tell me exactly which formula I need to caclulate how many shares she should purchase and how I can calculate the share price? can you also fill in the formulas with the numbers used.
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