Find the market value of the firm

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Reference no: EM1344039

You are an entrepreneur starting a biotech firm. If you are successful, the technology can be sold for $30m; if unsuccessful, it will be worthless. To fund your work, you need to raise $2m. Angel investors are willing to provide you with the $2m in initial capital in exchange for 50% of the (unlevered) equity in the firm. Please assume perfect capital markets and fill in all the spaces below

A) The market value of the firm is ____________

B) Suppose you borrow $1m. To raise the additional $1m, you need to sell  ______________% of the (levered) equity.

C) The value of your share of the firm's equity is ______________ in part A and _______________ in part B.

Reference no: EM1344039

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