Reference no: EM133002762
ACE Corp was formed five (5) years ago by the original founders and some venture capitalists (VC) with five million shares, three million held by the VCs priced at $2.50 per share and 2 million held by the founders priced at $0.50 per share. ACE estimates its free cash flows that will be available to the enterprise next year at $5,200,000. Since the venture is now in its maturity stage, ACE's free cash flows are expected to continue to grow at a 6% annual compound growth rate in the future. A weighted average cost of capital (WACC) for the venture is estimated at 15%. Interest-bearing debt owed by ACE is $17.5 million. In addition, the venture also has surplus cash of $4 million.
-Based on the above information, estimate the current total value of ACE Corp.
-What would be the value of the ACE's equity?
-How much of the value of ACE would belong to the VCs and how much to the founders?
-How much would be the per share value of ACE's equity?
-What would be the percentage gain on VC's investment
-What would be the percentage gain on founders' investment ?
-What is the internal rate of return on the founders' investment?
-What is the internal rate of return on the VC's investment?
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