Question
You have raised $200,000 from Angel investors to start an auto body shop. You want to keep the business in the family rather than selling
You have raised $200,000 from Angel investors to start an auto body shop. You want to keep the business in the family rather than selling it so you promise your investors that after youve saved up enough money, youll buy all their stock back at a price that will give them a 20% annual rate of return. You think you will be able to do this after four years, but you dont meet your initial targets and it takes 8 years before you have enough money saved to buy them out. Approximately how much more money does this delay cost you? What if you buy out half their equity in year 4, and the other half in year 8 how does that change the numbers? Explain what causes the difference in the calculations and how this should impact your plans.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started