What would be the pre-money and post money valuation

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Reference no: EM131579374

The Company needs $5 million in capital. In your analysis, assume the valuation date is the end of year 5, projected earnings will in 5 years will be $20 million, and an appropriate price to earning ratio for valuing these earnings in 20 times. Assume that there are 500,000 shares outstanding. The required return for the investors is 50%.

a) What percentage ownership at times 0 should the investors demand for their $5 million dollar investment?

b) What would be the number of new shares issued?

c) What would be the pre-money and post money valuation?

Reference no: EM131579374

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