Company cost of debt as discount rate

Assignment Help Financial Management

Reference no: EM132058688

1. TRUE OR FALSE According to Berkery the most efficient way of valuing a new venture is to discount future profits back to the present using the company’s cost of debt as the discount rate.

2. TRUE OR FALSE According to the 424B4 filed by Spotify on April 3rd, 2018, Spotify had gross margins of less than 25%, for the year ended December 31st, 2017.

3. TRUE OR FALSE. It is common for a VC fund to have investments of up to 25 different companies. A few large winners can easily offset the losers and sideways deals.

4. TRUE OR FALSE There is a potential conflict of interest if a Venture capital company manages multiple funds and each fund invests in a different series issued by the same company. The conflict arises because Fund X may invest in series A of company 1 and Fund Y may then invest in series B of company 1. If Fund Y places to high a pre-money value on the company it is essentially supporting investors in Fund X. The opposite is also a risk, if the pre-money valuation prior to the B series is set too low then the Venture Capital company is shifting value from Fund X investors to Fund Y investors.

Reference no: EM132058688

Questions Cloud

Suppose the required return on the project : In the previous problem, suppose the required return on the project is 12 percent. What is the project's NPV?

Calculate the total cost of goods sold for financial year : calculate the total Cost of Goods Sold for the financial year ended 30 June 201x, value of all iSLEEPs that remain in inventory account at the end of year.

Which of the torts has chris committed : Chris approaches Kate from behind and pushes her in the pool. Kate is injured. Which of the following torts has Chris committed?

What is the expected sustainable growth rate : What is the expected sustainable growth rate? What is your expectation of the market P/E ratio?

Company cost of debt as discount rate : According to Berkery the most efficient way of valuing a new venture is to discount future profits back to present using company’s cost of debt as discount rate

What is weighted average cost of capital for fairfax paint : What is the weighted average cost of capital for Fairfax Paint?

Maximizes the per-share stock price of stephenson equity : Which method of financing maximizes the per-share stock price of Stephenson’s equity?

What is npv-yellow sand health would compute for project : Several companies, including Green Forest Media and Yellow Sand Health, What is the NPV that Yellow Sand Health would compute for project A?

United states and venezuela that affects trading history : Specific differences between United States and Venezuela that affects trading history.

User Account

All Pages