NEED help with PROBLEM 2:

Apply the fundamental method of valuation to the following data in order to find a market value (price) for the venture. Part B. What portion of the company should be given up if there is a need for $1.6 m in venture capital?

WA-3- Valuation; Part 1. Feel free to use either Word or Excel Spreadsheet. Here are two problems under this assignment: IF YOU USE WORD FILE, MAKE SURE TO SHOW YOUR WORK. HOWEVER, IF YOU USE EXCEL, I CAN TRACE YOUR FORMULAS. Problem 1. Given the following information, and using the VC method of valuation, determine the % of the company that needs to be given up for $1.5 m investment. (10 points total) Required ROR by investor(s): Net income in five years: Expected P/E ratio in four years: 25% $ 3.2 m 12 times. Problem 2. Part A. Apply the fundamental method of valuation to the following data in order to find a market value (price) for the venture. Part B. What portion of the company should be given up if there is a need for $1.6 m in venture capital? (30 points total) Year % of growth Revenue (Sales) After-tax Margin After-tax Profit Discount Factor PV of Earnings 1 15% 3.4 m 0 0 1.30 0 2 20 4% 3 25 5 4 30 10 5 35 15 6 40 16 ____________________________________________________________ 7+ 12% 9 As you see from line 7 and beyond (7+), growth falls to 12%, and profit margin is 9%. Assume also discount rate for years 7 and beyond falls to 15% and stays the same for all such years