Q1) In rounded millions, how much combined debt and equity, at a minimum, needs to be raised for the first year? (2 pts) Q2) The three founders collectively put up $3,000 for 100% of their company. If they accept the Series A term sheet, their ownership will be significantly diluted. What is their theoretical post-money combined ownership value after the Series A? (2 pts) Q3) If there no other changes in the capital structure and the Series A investors have a required return of 50% in 5 years, what will the value of the company need to be in year 5 ? What will be the value of the options held by a single engineer at that time? (2 pts) Q4) Using sensitivity analysis, which of the following variables will have the greatest impact on cash in this financial plan? Show proof of your position (4 pts) 1. Price per unit of H1/D1 2. DSO 3. Engineering salaries 4. Debt/equity ratio Balance Sheet \begin{tabular}{|l|l} Accounts receivable & 1 months \\ \hline Inventory & 2 months \\ \hline Accounts payable & 1 months \\ \hline \end{tabular} Income Statement Ratio of D1 to H1 10 Revenue \begin{tabular}{|l|rr} \hline H1 & $ & 250,000 \\ \hline D1 & $ & 50,000 \\ \hline Cost of Goods & & \\ \hline H1 & & 35% \\ \hline D1 & & 45% \\ \hline \end{tabular} \begin{tabular}{|l|rrl|l|} \hline Commissions & & 8% \\ \hline Payroll taxes and benefits & & 25% & % of salary \\ \hline Recruiting cost & $ & 15,000 & Fee \\ \hline Sundry costs & & 200 & $ per head \\ \hline Video conferencing per head & & $1,000 & \\ \hline Rent per square foot & $ & 3.50 & \\ \hline Square feet per headcount & 250 & \\ \hline Venture debt interest rate & 7.25% & \\ \hline Taxes & 21% & rate \\ \hline \end{tabular} Fixed Assets Fixed Assets/Head $5,000 Depreciation 36 months Total capital required $6,000,000 Solve for this value last Issuance cost $80,000 Debt to equity ratio 33% Liabilities Accounts Payable Total Current Liabilities \begin{tabular}{|r|r|r|r|r|r|r|r|r|r|r|r|} \hline$71,450 & $71,850 & $72,250 & $77,650 & $73,050 & $43,050 & $275,450 & $261,650 & $262,850 & $833,850 & $1,206,350 & $1,578,850 \\ \hline 71,450 & 71,850 & 72,250 & 77,650 & 73,050 & 43,050 & 275,450 & 261,650 & 262,850 & 833,850 & 1,206,350 & 1,578,850 \\ \hline \end{tabular} Venture Debt Total Liabilities Shareholders' Equity Series A Preferred Stock Common Stock \begin{tabular}{|l|l|l|l|l|l|l|l|l|l|l|l|l|l|l|l|l|l|l|l|l|l|l|l|} \hline 87,500 & $87,500 & $87,500 & $87,500 & $87,500 & $87,500 & $87,500 & $87,500 & $8 & 87,500 & $87,500 & $ & 87,500 & $87,500 \\ \hline 22,500 & $22,500 & $22,500 & $22,500 & $22,500 & $22,500 & $22,500 & $22,500 & $ & 22,500 & $ & 22,500 & $ & 22,500 & $ & 22,500 \\ \hline \end{tabular} Subscription Required to Edit and Save Start your free one month trial of Microsoft 365 or sign in to activate an existing subscription. Fixed Asset Rexpuirements () Subscription Required to Edit and Save Start your free one month trial of Microsoft 365 or sign in to activate an existing subscription. \begin{tabular}{|l|l|r|} \hline & \multicolumn{1}{|c|}{ A } & \multicolumn{1}{c|}{ B } \\ \hline 1 & Post money ownership & \multicolumn{1}{c|}{0.25%} \\ \hline 2 & & \\ \hline 3 & & Shares \\ \hline 4 & Eng \#1 & 40,909 \\ \hline 5 & Eng \#2 & 40,909 \\ \hline 6 & Eng \#3 & 40,909 \\ 7 & Eng \#4 & 40,909 \\ \hline 8 & Eng \#5 & 40,909 \\ \hline 9 & Eng \#6 & 40,909 \\ \hline 10 & Eng \#7 & 40,909 \\ \hline 11 & Eng \#8 & 40,909 \\ \hline 12 & Eng \#9 & 40,909 \\ 13 & Eng \#10 & 40,909 \\ \hline 14 & Total Granted & 409,090 \\ 15 & & \\ \hline 16 & Total Pool & 2,454,545 \\ \hline 17 & & \\ \hline 18 & Remaining Available & 2,045,455 \\ \hline 19 & & \\ \hline 20 & & \end{tabular} Q1) In rounded millions, how much combined debt and equity, at a minimum, needs to be raised for the first year? (2 pts) Q2) The three founders collectively put up $3,000 for 100% of their company. If they accept the Series A term sheet, their ownership will be significantly diluted. What is their theoretical post-money combined ownership value after the Series A? (2 pts) Q3) If there no other changes in the capital structure and the Series A investors have a required return of 50% in 5 years, what will the value of the company need to be in year 5 ? What will be the value of the options held by a single engineer at that time? (2 pts) Q4) Using sensitivity analysis, which of the following variables will have the greatest impact on cash in this financial plan? Show proof of your position (4 pts) 1. Price per unit of H1/D1 2. DSO 3. Engineering salaries 4. Debt/equity ratio Balance Sheet \begin{tabular}{|l|l} Accounts receivable & 1 months \\ \hline Inventory & 2 months \\ \hline Accounts payable & 1 months \\ \hline \end{tabular} Income Statement Ratio of D1 to H1 10 Revenue \begin{tabular}{|l|rr} \hline H1 & $ & 250,000 \\ \hline D1 & $ & 50,000 \\ \hline Cost of Goods & & \\ \hline H1 & & 35% \\ \hline D1 & & 45% \\ \hline \end{tabular} \begin{tabular}{|l|rrl|l|} \hline Commissions & & 8% \\ \hline Payroll taxes and benefits & & 25% & % of salary \\ \hline Recruiting cost & $ & 15,000 & Fee \\ \hline Sundry costs & & 200 & $ per head \\ \hline Video conferencing per head & & $1,000 & \\ \hline Rent per square foot & $ & 3.50 & \\ \hline Square feet per headcount & 250 & \\ \hline Venture debt interest rate & 7.25% & \\ \hline Taxes & 21% & rate \\ \hline \end{tabular} Fixed Assets Fixed Assets/Head $5,000 Depreciation 36 months Total capital required $6,000,000 Solve for this value last Issuance cost $80,000 Debt to equity ratio 33% Liabilities Accounts Payable Total Current Liabilities \begin{tabular}{|r|r|r|r|r|r|r|r|r|r|r|r|} \hline$71,450 & $71,850 & $72,250 & $77,650 & $73,050 & $43,050 & $275,450 & $261,650 & $262,850 & $833,850 & $1,206,350 & $1,578,850 \\ \hline 71,450 & 71,850 & 72,250 & 77,650 & 73,050 & 43,050 & 275,450 & 261,650 & 262,850 & 833,850 & 1,206,350 & 1,578,850 \\ \hline \end{tabular} Venture Debt Total Liabilities Shareholders' Equity Series A Preferred Stock Common Stock \begin{tabular}{|l|l|l|l|l|l|l|l|l|l|l|l|l|l|l|l|l|l|l|l|l|l|l|l|} \hline 87,500 & $87,500 & $87,500 & $87,500 & $87,500 & $87,500 & $87,500 & $87,500 & $8 & 87,500 & $87,500 & $ & 87,500 & $87,500 \\ \hline 22,500 & $22,500 & $22,500 & $22,500 & $22,500 & $22,500 & $22,500 & $22,500 & $ & 22,500 & $ & 22,500 & $ & 22,500 & $ & 22,500 \\ \hline \end{tabular} Subscription Required to Edit and Save Start your free one month trial of Microsoft 365 or sign in to activate an existing subscription. Fixed Asset Rexpuirements () Subscription Required to Edit and Save Start your free one month trial of Microsoft 365 or sign in to activate an existing subscription. \begin{tabular}{|l|l|r|} \hline & \multicolumn{1}{|c|}{ A } & \multicolumn{1}{c|}{ B } \\ \hline 1 & Post money ownership & \multicolumn{1}{c|}{0.25%} \\ \hline 2 & & \\ \hline 3 & & Shares \\ \hline 4 & Eng \#1 & 40,909 \\ \hline 5 & Eng \#2 & 40,909 \\ \hline 6 & Eng \#3 & 40,909 \\ 7 & Eng \#4 & 40,909 \\ \hline 8 & Eng \#5 & 40,909 \\ \hline 9 & Eng \#6 & 40,909 \\ \hline 10 & Eng \#7 & 40,909 \\ \hline 11 & Eng \#8 & 40,909 \\ \hline 12 & Eng \#9 & 40,909 \\ 13 & Eng \#10 & 40,909 \\ \hline 14 & Total Granted & 409,090 \\ 15 & & \\ \hline 16 & Total Pool & 2,454,545 \\ \hline 17 & & \\ \hline 18 & Remaining Available & 2,045,455 \\ \hline 19 & & \\ \hline 20 & & \end{tabular}
