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Please answer the above question showing all calculations. I realize the question is very long so I promise I'll write a good review for a
Please answer the above question showing all calculations. I realize the question is very long so I promise I'll write a good review for a detailed answer :) Thank you for the help!!
a. Venture Capital/Private Equity Case Study (Technology Company Acquisition) As we know, there are four main valuation methods. For this case study we are going to use Earnings Before Interest Taxes Depreciation and Amortization (EBITDA) for the Target Company. The following are the case study assumptions Models Use Perpetuity (P): Use for initial and terminal value. Gordon Growth (GG): Use for initial and terminal value. Multiple Approach (M): Calculate the value using a 22x, 44x, and 55x earnings Discounted Cash Flow (DCF) Calculate the Terminal Value (TV) Assumptions: Small Tech Start-Up in Software Consumer Products Space being bought by Private Equity/Venture Capital Firm Also, show the calculations for valuations utilizing the above methods: Free Cash Flow (FCF): EBITDA (t-0)- $20 million FCF Growth Rate: g going in 15%, g terminal-10% Expected Rate of Return E(r)r = 30% E(r) (i) terminal = 40% Proform g (t+1) 40%, g (t+2)-28%, g (t+3) = 25%, g (t+4)-15% Target Company Acquisition Price = $200.0 million Three (3) Year Holding Period a Cash Flow Growth Rates Using Perpetuity/Gordon Growth/Multiple Approach: What is the intrinsic value of the target company? Using DCF: What is PV, NPV, IRR, Break-Even Period? Would you Accept or Reject the Project? If the NPV was negative what four (4) iterations would you go through? If you still could not get the project NPV positive, what would be your last scenario be? And what would NNPV need to beStep by Step Solution
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