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 40% ownership share in the company. What is the company's "after the-money" valuation (valuation made by the VC in exchange for 40% ownership)? $222.22mil $266.67 mil. 5666.67mil. $250mil. $200mil

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

Personal Finance

Authors: Jeff Madura

3rd Edition

0321357973, 978-0321357977

More Books

Students also viewed these Finance questions