User Account

All Pages

What is the post-money valuation

Assignment Help Financial Management
Reference no: EM131067122

A potential investor is seeking to invest $750,000 in our venture at an expected 40% rate of return. The firm currently has 2,000,000 shares held by the founders. The venture is projected to generate $850,000 in income per year over the next 5 years. A comparable firm produced $1,750,000 in income, and has a total market cap of $15,000,000. 1) What ownership percentage of our firm must be sold in order to provide the investor with their targeted return? (round to 5 decimal places) 2) What number of shares must be issued to the new investor in order for the investor to earn his targeted return? (round up to whole shares) 3) What is the issue price per share? (round to 5 decimal places) 4) What is the pre-money valuation? (round up to whole dollars) 5) What is the post-money valuation? (round up to whole dollars) 6) What is the value of the venture in year five using the direct capitalization method? (whole $’s) 7) What is the value of the venture in year five using the direct comparison method? (whole $’s)

Reference no: EM131067122

Questions Cloud

What is the growth rate on the cat stock dividend : Caterpillar Inc. (CAT) stock currently (2015) pays $0.77 per share quarterly dividend (the dividend was $0.42 per share in 2008). Assuming constant growth, what is the growth rate on the CAT stock dividend? Find the beta for CAT stock, and the curren..
Two different conveyor belt systems : Comparing Mutually Exclusive Projects [ LO1] Lang Industrial Systems Company ( LISC) is trying to decide between two different conveyor belt systems. System A costs $ 240,000, has a four- year life, and requires $ 75,000 in pretax annual operating co..
What should be the price of this preferred stock : A share of Company Z preferred stock pays a quarterly dividend of $3.80. If investors require a 12 percent rate of return, what should be the price of this preferred stock?
What is the banks cost of preferred stock : Holdup Bank has an issue of preferred stock with a $5.35 stated dividend that just sold for $90 per share. What is the bank’s cost of preferred stock?
What is the post-money valuation : A potential investor is seeking to invest $750,000 in our venture at an expected 40% rate of return. The firm currently has 2,000,000 shares held by the founders. The venture is projected to generate $850,000 in income per year over the next 5 years...
Continuously compounded risk-free interest rate : A stock price is currently $40. Over every 3-month period the stock prices goes either up by 10% or down by 10%. The continuously compounded risk-free interest rate is 12% per year. Use a 2-step binomial tree to find the value of a 6-month American p..
Find the current value of the call option : A stock price is currently $80. It is known that in 4 months it will be either $75 or $85. The risk-free interest rate is 5% per year with continuous compounding. Consider a 4-month European call option with a strike price of $80. Compute the risk-ne..
Annual cost of financing for franc-denominated bonds : ALTEC Inc. can issue bonds in either U.S. dollars or in Swiss francs. Dollar-denominated bonds would have a coupon rate of 15%; Swiss franc–denominated bonds would have a coupon rate of 12%. what is the annual cost of financing for the franc-denomina..
Leave itself open to the exchange rate risk : LEXCO Co. just agreed to a long-term deal in which it will export products to Japan. It needs funds to finance the production of the products that it will export. The products will be denominated in dollars. Should LEXCO finance its production with y..

Reviews

Write a Review

Financial Management Questions & Answers

  Arithmetic average return on the stock over five-year period

You've observed the following returns on Doyscher Corporation's stock over the past five years: -25.8 percent, 14.2 percent, 31.4 percent, 2.6 percent, and 21.6 percent. What was the arithmetic average return on the stock over this five-year period?

  Annual production quality makes the present value

Demand for Blow Pops has increased to the point where Tootsie Roll industries is considering buying a new plant solely devoted to Blow Pops. Tootsie receives a wholesale price of $0.45 for each Blow Pop delivered to its distributor. What annual produ..

  Construct replicating portfolio to replicate

Construct a Replicating Portfolio (RP) to replicate a 1.5-year Bond-0 that pays 15 percent of coupon per year. The available bonds for replication are: a one year zero coupon Bond-1, a 1.5-year Bond-2 that pays 13 percent coupon per year, and a 1-yea..

  1 calculate the audjpy cross rate when the following fx

1 calculate the audjpy cross rate when the following fx spot rates are quoted bullaudusd0.6066bullusdjpy115.90 give

  EAR and Annuities-plan for retirement

You are helping your friend plan for her retirement. if interest rates are 12 percent per year, compounded quarterly, how much must she deposit into her retirement fund at the end of each month (in equal amounts per month) over the next 25 years, in ..

  Treasury stock method of calculating diluted earnings share

Which statement would be most consistent with the Treasury Stock Method of calculating diluted earnings per share?

  Compute the value of this stock with a required return

A firm is expected to pay a dividend of $2.45 next year and $2.60 the following year. Financial analysts believe the stock will be at their price target of $95 in two years. Compute the value of this stock with a required return of 12.4 percent.

  What is the yield to maturity for these bonds

Atlantis Fisheries issues zero coupon bonds on the market at a price of $415 per bond. Each bond has a face value of $1,000 payable at maturity in 17 years. What is the yield to maturity for these bonds?

  The value of gillettes stock

Assume Gillette Corporation will pay an annual dividend of $0.64 one year from now. Analysts expect this dividend to grow at 12.7% per year therafter until the 6th year. Therafter, growth will level off at 2.5% per year. The value of Gillette's stock..

  What is the price value of a basis point for this bond

Consider a 4-year zero-coupon bond with a 6% yield to maturity. The bond price per $1000 of face value is $762.09. What is the price value of a basis point for this bond?

  Find the firms debt ratio

Given the following information for the Duke Tire Company, find the firm's debt ratio (i.e., total liabilities / total assets): ROE (N/E) = 0.24 (expressed as a decimal)

  Expected return given these three economic state

Refer to the table below to complete this question. "Compute the expected return given these three economic states, their likelihoods, and the potential returns Economic State Probability Return Fast Growth 0.20 40% Slow Growth 0.50 10% Recession 0.2..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd