Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

ONLY ASNWER 4 5 6 & 7 A potential investor is seeking to invest $850,000 in our venture at an expected 35% rate of return.

ONLY ASNWER 4 5 6 & 7
image text in transcribed
image text in transcribed
A potential investor is seeking to invest $850,000 in our venture at an expected 35% rate of return. The firm currently has 1,000,000 shares held by the founders. The venture is projected to generate $1,200,000 in income per year at year 5. A comparable firm produced $2,000,000 in income and has a total market cap of $20,000,000. 1) What ownership percentage of our firm must be sold in order to provide the investor with their targeted return? (round to 5 decimal places) 2) What number of shares must be issued to the new investor in order for the investor to earn his targeted return? (round up to whole shares) 3) What is the issue price per share? (round to 5 decimal places) 4) What is the pre-money valuation? (whole dollars) 5) What is the post-money valuation? (whole dollars) 6) What is the value of the venture in year five using the direct capitalization method? (whole $ 's) 7) What is the value of the venture in year five using the direct comparison method? (whole \$'s)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Finance questions