Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You have a groundbreaking idea to develop a new technology that would change the world. You have approached a venture capitalist, asking for a $100

image text in transcribed

You have a groundbreaking idea to develop a new technology that would change the world. You have approached a venture capitalist, asking for a $100 million investment in your company. You believe that the initial $100 million investment to generate $40 million annual free cash flows indefinitely. The discount rate is 15%. If the venture capitalist agrees to give you the $100 million in exchange for a 45% ownership share in the company. What is the company's "after-the-money" valuation (valuation made by the VC in exchange for 45% ownership)? $666.67mil. O $250mil. $266.67mil. $200mil. $222.22mil

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

Fundamentals Of Financial Management Concise

Authors: Eugene F. Brigham, Joel F. Houston

11th Edition

0357517717, 9780357517710

More Books

Students also viewed these Finance questions

Question

Adaptation to the new rules was performed easily by the employees.

Answered: 1 week ago

Question

The assessor will make a determination of the tax due.

Answered: 1 week ago