Venture capital investment is spread over three rounds

Assignment Help Financial Management

Reference no: EM131527959

Scenario where venture capital investment is spread over three rounds: $1,500,000 at t=0, 1,250,000 at t=2, and 750,000 at t = 4. Investors at t=0 require a 70% annual target return, investors at t=2 will demand a 50% annual target return, and investors at t=4 will require a 30% annual target return. The firm is expected to earn $6.25 million in year 5, and comparable firms have a P/E ratio of 18. There are 1 million shares owned by the founder and the VC investors will get new shares. Early investors anticipate the later investments.

What percentage of the final value of the firm does the round 1 investor require at t=5?

What percentage of the final value of the firm does the round 2 investor require at t=5?

What percentage of the final value of the firm does the round 3 investor require at t=5?

How many shares will the round 1 investor receive when the investment is made?

Reference no: EM131527959

Questions Cloud

Discuss the steps in processing business transactions : What is the difference between a note payable and an account payable?

Examine the underlying historical and economic reasons : Examine the underlying historical and economic reasons behind the quest for alternatives to incarcerating offenders in jails and prisons.

Explain the author thesis-the main point or points : Explain the author's thesis-the main point or points that he/she is trying to make in the book. (This is not a description or summary of the book

Organization encourage positive organizational behavior : Does this organization encourage positive Organizational Behavior? If yes, how do they demonstrate this?

Venture capital investment is spread over three rounds : Scenario where venture capital investment is spread over three rounds: What percentage of the final value of the firm does the round 1 investor require at t=5?

Why does the recordkeeper prepare a trial balance : If an incorrect amount is journalized and posted to the accounts, how should the error be corrected?

Encourage positive organizational behavior : Does this organization encourage positive Organizational Behavior? If yes, how do they demonstrate this?

The development of various therapeutic techniques : How did the development of various therapeutic techniques influence the way that treatment is provided to various populations?

How much money will you invest in stock : You have $120, 000 to invest in a portfolio containing Stock X, how much money will you invest in Stock Y?

User Account

All Pages