Rogue Space is a startup technology company that specializes in fixing satellites while they are in orbit around the Earth. The company has been raising funds from friends, family, private investors, and corporate partners in order to fund their first space launch of equipment. The company is looking at several methods for raising finance - private financing through an angel or venture capitalist, issuing debt through bonds, as well as potentially going public with an initial public offering. As the newly hired CFO, you have been asked to investigate the options and calculating out the different scenarios for both equity and debt. You decide to address the potential of equity financing first. You know that from equity financing from the company founders, as well as Series A funding from friends and family, the company has 10 million in outstanding shares. Using an angel investor or venture capitalist will require Rogue to issue additional stocks. To attract investors, you decide to offer 15% equity in the company to an investor for $1.5 million. Your second option to raise funding is to go public vith an IPD. To do this, you can either use an Auction IPD or a firm commitment IPO. You decide to run the scenario for both options. You put your feelers out to get an idea of the bids you could receive if you choose to use an auction IPD. You nould like to sell 1 million shares in the company. The information you receive reveals the following soft offers. \begin{tabular}{|r|l|} \hline Price & Number of \\ \hline 32.42 & 175,000 \\ \hline 32.25 & 195,000 \\ \hline 32 & 150,000 \\ \hline 31.99 & 200,000 \\ \hline 31.4 & 165,000 \\ \hline 31 & 275,000 \\ \hline 30.75 & 250,000 \\ \hline 30.5 & 100,000 \\ \hline \end{tabular} Based on this data, what vould be the auction offer price per share? \begin{tabular}{|c|c|} \hline Price & \multicolumn{2}{c}{ Number of Cumulative Shares } & Cemand \\ \hline$32.42 & 175,000 \\ \hline$32.25 & 195,000 \\ \hline$32.00 & 150,000 \\ \hline$31.99 & 200,000 \\ \hline$31.40 & 280,000 \\ \hline$31.00 & 270,000 \\ \hline$30.75 & 250,000 \\ \hline$30.50 & 100,000 \\ \hline \end{tabular} Auction Price per share: With a firm commitment IPD, you can vork to set the share price for your 1 million shares. This will result in a total of 11 million outstanding shares. You vould like to set the share price at $31 per share. There is an underwriting - How much could you potentially raise from the IPQ? - What rould be the market value of Rogue after the IPO? Value raised by IPO: Market value after IPO: Hest, you look into the potential of issuing a bond to raise debt funding. To get an idea of potential bond performance, rates, and other data, you decide to look at the US Treasury bonds market. You find that in January of 2010, the US treasury issued a 10-year inflation-indexed note vith a coupon of 4\%, which pays semiannually. When the bond was issued, the CPI was 400 , but now, 10 years later, the CPI is at 300 . Assume - What vas the principle and coupon payment made on the bond in 2020 ? - How does performance of this bond relate to potential performance of your bond, should Rogue use this method of financing? CPInder Depreciation: Coupon Payment: Principle Amount: Hon does performance of this bond relate to potential performance of your bond, should Rogue use this method of financing? (Use 3 sentences to address the question.) You contemplate issuing a callable, 10 -year, 5% coupon bond with annual coupon payments. The bond can be called after 5 years, and it has a price of $95 ith a face value of $100. Armed with your data, you are ready to report back about your recommendation for raising capital. As the CFD of Rogue Space, what funding method would you present to management as the most feasible method of raising capital? Support your response by referring to the data you have calculated, using a minimum of 3 sentences to address the
