Question
Use Excel Only for all the quantitative portions of this problem. As a consultant to an entrepreneur behind a successful biotech company, you have made
Use Excel Only for all the quantitative portions of this problem. As a consultant to an entrepreneur behind a successful biotech company, you have made the following assumptions regarding that venture. Assumptions: (Sales numbers are in 1,000s) Years 1-7: Years 8-10: Terminal Years (years 10+): Initial Revenue: 2,550.00 ---- ---- Growth in Sales: 50% Growth in Sales: 35% Growth in Sales: 12% EBIAT/Sales: 14% EBIAT/Sales: 14% EBIAT/Sales: 14% (FA+WC)/Sales: 50% (FA+WC)/Sales: 50% (FA+WC)/Sales: 50% Discount rate: 25% Discount rate: 20% Discount rate: 15% Question a. Using the Free Cash Flow method, what is the total value of this venture? Question b. Regardless of the above question, why do you think some other publicly-traded biotech companies which continue to have losses show positive prices? Explain in needed details.
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