Question
This is all information I have and want to do some calculations, Venture capital (VC)investment Problem 1: Suppose a Venture capital (VC) investor wants to
This is all information I have and want to do some calculations, Venture capital (VC)investment
Problem 1: Suppose a Venture capital (VC) investor wants to earn a 30% return on its investment and estimates that the investee firm will have a 15% chance of failure each year. Estimate the adjusted discount rate. Show all steps in detail including the formula for calculations. Good to have comments in the text if for assumption, please.
Problem 2: You are interested in buying control of a private firm. Using the comparable transactions valuation method from a recent change of control acquisition of a public company in the same industry, you have determined that in a change of control situation the private firm that you are interested in buying would be worth $12. If the discount for lack of control is 20% and the discount for lack of marketability is 15%, what is the price you should be willing to pay to gain control of the private firm? Show all steps in detail including the formula for calculations. Good to have comments in the text if for assumption, please.
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