How much would you suggest as a valuation for the company

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Question - Assume you are an investment banker, and your client (a startup company specializing in building AI systems to identify illicit activities associated with Bitcoin) decided to take his company public.

Based on its financial projections, the company is expected to make a net profit of $1M in Y1, growing linearly to $5M in Y5, and keeping steady with a growth rate of 10% in perpetuity after that

The risk free rate is 2%, the β for the company is 2.5, and the expected market return is 8%.

How much would you suggest as a valuation for the company?

Start with CAPM, and then use the DCF/NPV to value the company. Provide your answer on a spreadsheet.

Reference no: EM132855762

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