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A potential investor is seeking to invest $500,000 in a venture, which currently has 1,000,000 shares held by its founders, and is targeting a 50% return five years from now. The venture is expected to produce half a million dollars in income per year at year 5. It is known that a similar venture recently produced $1,000,000 in income and sold shares to the public for $10,000,000. a. What is the percent ownership of our venture that must be sold in order to provide the venture investor’s target return? b. What is the number of shares that must be issued to the new investor in order for the investor to earn his target return? c. What is the issue price per share? d. What is the pre-money valuation? e. What is the post-money valuation? Make sure you specifically include a section in your submission that clearly states your answer to each question. I will not hunt through your spreadsheets or calculations to find your answers. If possible, please try to include only one document in your submission and please do not use embedded spreadsheets if you use a word document. Please label your assignment using our assignment labeling convention. Each question is worth three points.
Goods available for sale total $25,000, beginning inventory is $8,000, endings inventory is $12,000, and cost of goods sold is $10,000. How many days is the days-sales-in-inventory?
Becky Fenton has 20/40/15 automobile insurance coverage. If two other people are awarded $37,000 each for injuries in an auto accident in which Becky was judged at fault, how much of this judgment would the insurance cover?
Ridiculousness, Inc., has sales of $47,500, costs of $20,500, depreciation expense of $1,800, and interest expense of $1,300. If the tax rate is 35 percent, what is the operating cash flow, or OCF?
Renfro Rentals has issued bonds that have a 11% coupon rate, payable semiannually. The bonds mature in 15 years, have a face value of $1,000, and a yield to maturity of 10.5%. What is the price of the bonds? Round your answer to the nearest cent.
For the given cash flows, suppose the firm uses the NPV decision rule. Year Cash Flow 0 –$ 153,000 1 78,000 2 67,000 3 49,000 Requirement 1: At a required return of 9 percent, what is the NPV of the project?
Problems on Financial Management and Markets
Shelby purchased 100 shares of ABCD Growth fund for $10.00 per share. She had income dividends of $15, capital gain distributions of $35, and a capital gain of $120 in the year she sold her shares. What was her percentage of total return on this inve..
Based on the pecking-order theory of capital structure, what are the assumptions for Miller and Modigliani that have been relaxed?
DAR Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the company would have 180,000 shares of stock outstanding.
A mechanical engineer must recommend an A/C system to a commercial building owner. The owner intends to own the building for at least 10 years. A conventional split system has a design life of 10 years, a cost of $54,000, and annual operating costs o..
Brushy Mountain Mining Company's coal reserves are being depleted, so its sales are falling. Also, environmental costs increase each year, so its costs are rising. As a result, the company's earnings and dividends are declining at the constant rate o..
The market segmentation theory proposes that,
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