Private placement of equity in his early stage venture

Assignment Help Financial Management
Reference no: EM131576914

Roger Harkel, CEO of Bestafer, Inc. seeks to raise $2 million in a private placement of equity in his early stage venture. Harkel conservatively projects net income of $5 million in year five and knows that comparable companies trade at a price earnings ratio of 20X. If the company has 1,000,000 shares outstanding before the private placement, what price per share should she agree to pay if her required rate of return is 50%? (Note: Assume investment is in standard preferred stock with no dividends and a conversion rate to common of 1:1. Round off to the nearest integer.)

Reference no: EM131576914

Questions Cloud

Construct a huffman code for the symbols with ascii codes : Construct a Huffman code for the symbols with ASCII codes given the frequency of their occurrence in representative input.
Briefly explain what the data in each column represents : ROI of Business Majors and Engineering Majors. A detailed description of data used in this analysis. Briefly explain what the data in each column represents.
How does a societys construct of gender influence : How does a societys construct of gender influence how children are raised and how gender assumptions can influence child development?
Compute the number of different spanning trees : Compute the number of different spanning trees of Kn for n = 1, 2, 3, 4, 5, 6. Conjecture a formula for the number of such spanning trees.
Private placement of equity in his early stage venture : Roger Harkel, CEO of Bestafer, Inc. seeks to raise $2 million in a private placement of equity in his early stage venture.
Explain league to be a strong or weak organization : What specific objections did Wilson address in his speech
Find a minimum spanning tree of each of the given graphs : Find a minimum spanning tree of each of these graphs where the degree of each vertex in the spanning tree does not exceed 2.
A commercial bank has floating-rate loans : A commercial bank has floating-rate loans.
What is the purpose of a bank reconciliation : Question - What is the purpose of a bank reconciliation? What are the reasons for differences between the cash reported in the accounting records

Reviews

Write a Review

Financial Management Questions & Answers

  Calculating the costs and benefits of training programs

Why should trainers be concerned about calculating the costs and benefits of training programs? What are the advantages and disadvantages of doing so?

  Write methodology for this topic portfolio selection

Discuss what is covered in a disciplinary defense insurance policy Write a methodology for this topic " portfolio selection".

  Wealth protection-insurance planning

Boon Teck has savings of $35,000 and shares worth $78,000. What is the additional amount of life insurance that Boon Teck needs?

  What is the interim incremental net cash flow

Project grow will result in an increase of 5,000 units per year at a sale price of $ 11. each (assume 0% inflation). The additional sales will generate additional operating expenditures of 9. Per unit plus 3,000 in fixed operating cost. What is the i..

  Proportion of google-walmart risk can be diversified away

What proportion of Google's and Walmart's risk (variance) can be diversified away?

  Provisions often result in reduced stockholder wealth

Explain why Poison Pills provisions often result in reduced Stockholder wealth.

  Assume before-tax component costs of equity-preferred stock

Suppose that B2B, Inc., has a capital structure of 37 percent equity, 18 percent preferred stock, and 45 percent debt. Assume the before-tax component costs of equity, preferred stock, and debt are 13.5 percent, 9.0 percent, and 8.5 percent, respecti..

  What is the stocks expected dividend yield for coming year

what is the stock's expected dividend yield for the coming year?

  Limitation of the percent of sales method

Which of the following is a limitation of the “percent of sales method” of preparing pro forma financial statements?

  One-year zero-coupon bonds and perpetuities

how much of its portfolio should it allocate to one-year zero-coupon bonds and perpetuities, respectively, if these are the only two assets funding the plan?

  What is the value of a 6 month european call option

The risk-free interest rate is 5% per annum with continuous compounding. What is the value of a 6-month European call option with a strike price of $51?

  What is the present value per year

What is the present value of $3,225 per year, at a discount rate of 7 percent, if the first payment is received 8 years from now and the last payment is received 21 years from now?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd