Should the firm accept the venture capital

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The firm has limited capital and is estimated to have a value of $25million with capital constraints. A venture capitalist is willing to contribue $15million to the firm in exchange for 40% of the value of the firm. With this additional capital, the firm will be worth $50 million.

a. Should the firm accept the venture capital? Justify with calculations.

b. At what percentage of firm value would you as the owner of the private firm break even on the venture capital financing?

Reference no: EM132052928

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