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What is the implied price per share of surelock stock

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Reference no: EM13891760

Using the following information, please answer the questions about Surelock Homes, a start-up company. In your analysis, assume the valuation date is the end of year 6, projected earnings in year 6 will be $12 million, and an appropriate price-to-earnings ratio for valuing these earnings is 20 times.

 

FinancingRound

Amount in millions

Year

RequiredReturn

1

$ 6

0

60%

2

8

2

40%

3

12

4

30%

In addition, the company wants to reserve 15 percent of the shares outstanding at time 6 for employee bonuses and options.

a. What percentage ownership at time 0 should round 1 investors demand for their $6 million investment?

b. If Surelock presently has 1 million shares outstanding, how many shares should round 1 investors demand at time 0?

c. What is the implied price per share of Surelock stock at time 0?

d. What is Surelock's pre-money value at time 0? What is its post- money value?

Reference no: EM13891760

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