Estimate the exit value of cirrus electronics

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Question: You are a venture capitalist and have been approached by Cirrus Electronics, a private firm. The firm has no debt outstanding and does not have earnings now but is expected to be earning $ 15 million in four years, when you also expect it to go public. The average price earnings ratio of other firms in this business is 50.

a. Estimate the exit value of Cirrus Electronics.

b. If your target rate of return is 35%, estimate the discounted terminal value of Cirrus Electronics

c. If you are contributing $ 75 million of venture capital to Cirrus Electronics, at the minimum, what percentage of the firm value would you demand in return?

Reference no: EM131690056

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