Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Several years ago, you founded a business with $0.4 million and created 1.7 million shares. Subsequently, you sold an additional 0.9 million shares to

 

Several years ago, you founded a business with $0.4 million and created 1.7 million shares. Subsequently, you sold an additional 0.9 million shares to an angel investor to finance the expansion of your business. Now, you want to raise capital from a venture capitalist (VC). The VC has agreed to invest $6 million with a post-money valuation of $15 million for your business. Assume this is the VC's first investment in your business. You own x% of the business after this funding round. How much is x? Round your answer to the nearest integer (no decimal places). Question 14 5 pts ABC Co. has 27 million shares outstanding trading at $18 per share. ABC also has $153 million in outstanding debt. ABC has equity beta of 2. The expected market return is 7.4% and the risk-free rate is 1.2%. Given that ABC has return on assets of 11.8%, find its cost of debt d%. How much is d? Round your answer to the nearest integer (no decimal places).

Step by Step Solution

3.45 Rating (161 Votes )

There are 3 Steps involved in it

Step: 1

To calculate the ownership percentage we need to first calculate the premoney valuation of the busin... 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

Fundamentals of Corporate Finance

Authors: Berk, DeMarzo, Harford

2nd edition

132148234, 978-0132148238

More Books

Students also viewed these Finance questions

Question

What is GST?

Answered: 1 week ago

Question

Question 2 For an n x n matrix A = form) via (aij)

Answered: 1 week ago

Question

16. What is the difference between a lesion and an ablationpg78

Answered: 1 week ago