Reference no: EM133062303 , Length: word count:2500

MBF305 Advanced Finance - EU Business School

Learning outcome 1: The key metrics that matter to venture capital
Learning outcome 2: How to value early and late stage companies

Task 1:

Suppose you are employed at the GreenWorld Venture Capital Fund, a hypothetical venture capital fund in Seattle. Your first assignment is to value the price per share for a $5 million investment in a start-up green technology venture, and to decide on what share of the firm you should demand. You project the firm will have Net Income in Year 5 of $15 million. Similar profitable green ventures listed on stock exchanges are trading at an average Price-Earning Ratio of 5. The firm currently has 400,000 shares outstanding. The GreenWorld Venture Capital Fund requires a target rate of return of 50%. What is the appropriate price per share, and how many shares do you require? Suppose further that you are of the opinion that three more senior staff will need to be hired by this green technology venture, and this number of top caliber recruits will probably require options amounting to 10% of this venture's common stock outstanding. Additionally, you believe that, at the time the venture goes public, additional shares equivalent to 10% of the common stock will be sold to the public. (Refer to the appendix to address this question.)

Task 2:

Identify a private equity firm of your choice, and elaborate upon their business objective, the portfolio they invested in, assets under management, nature of their investments. Also select one of their key investments and elaborate upon that, especially the performance of that investment. You are also required to research upon their due diligence process to select investment.

Attachment:- Advanced Finance.rar