Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

VALUATION ONE ROUND 1. Venture is formed with 2,000,000 shares held by founders. New investor contributes $1M to venture. Exit time is in 5 years.

VALUATION ONE ROUND

1. Venture is formed with 2,000,000 shares held by founders. New investor contributes $1M to venture. Exit time is in 5 years. Investor demands 50% annualized return. Venture income of $1,000,000 @ exit. A similar venture recently sold shares to the public for $20M with venture earnings of $2M.

a) What is the ownership of the VC?

b) How many shares will be issued for VC?

c) What is the issue share price?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

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

American Public School Finance

Authors: William Owings, Leslie Kaplan

2nd Edition

1111838046, 978-1111838041

More Books

Students also viewed these Finance questions

Question

=+Who are you right now, and where do you want to be?

Answered: 1 week ago