User Account

All Pages

Venture capital valuation method

Assignment Help Finance Basics
Reference no: EM131082566

Venture Capital Valuation Method

A venture capitalist wants to estimate the value of a new venture. The venture is not expected to produce net income or earnings until the end of Year 5 when the net income is estimated at $1,600,000. A publicly traded competitor or "comparable firm" has current earnings of $1,000,000 and a market capitalization value of $10,000,000.

  • A.Estimate the value of the new venture at the end of Year 5. Show your answer using both the direct comparison method and the direct capitalization method. What assumption are you making when using the current price-to-earning relationship for the comparable firm?
  • B.Estimate the present value of the venture at the end of Year 0 if the venture capitalist wants a 40 percent annual rate of return on the investment.

Reference no: EM131082566

Questions Cloud

Write the code to read the raw training data : Write the code to read the raw training data into the data structure in the first approach described in Section 1.2.
Write a outline proposing a plan to conduct market research : After participating in the Market Research Simulation, write a one-to-two page outline proposing a plan to conduct market research for the company or product of your choice.
Compare the total time it takes to read the raw data : Compare the total time it takes to read the raw data
Identify the reasons that greenwood was a target for the mob : Identify the reasons that Greenwood was a target for the mob. What does the white Oklahoman response to Greenwood reveal about the attitudes of the white southerner toward the success of black communities?
Venture capital valuation method : A venture capitalist wants to estimate the value of a new venture. The venture is not expected to produce net income or earnings until the end of Year 5 when the net income is estimated at $1,600,000. A publicly traded competitor or "comparable fi..
Analyze how cultural norms impact the risk of getting hiv : Based on the CDC website, analyze how cultural norms impact the risk of getting HIV. Explain one method or action on how to address this challenge.
Design this function to take a character vector : Design this function to take a character vector with multiple strings
Disadvantages of rosetta stone going public : What are the advantages and disadvantages of Rosetta Stone going public?
Undertaking arbitrage activity : Explain how an individual would profit from financial arbitrage in this situation. Calculate the % return the individual would earn from undertaking arbitrage activity.

Reviews

Write a Review

Finance Basics Questions & Answers

  What is the payback period for each proposed pizza

Answer on excel:1. What is the payback period for each proposed pizza?2. What is the discounted payback period for each proposed pizza?3. What is the NPV for each proposed pizza?

  What are the measures of exposure traditionally

Short questions on risk management and measures of exposure - What are the three measures of exposure traditionally studied, and what are the advantages and disadvantages of using each one?

  Tvm-compounding and discounting

Find out the present value of $2,000 received at the end of each year for next 15 years at a discount rate of 7%? How are the processes of discounting and compounding related? Describe.

  Youre trying to determine whether to expand your business

youre trying to determine whether to expand your business by building a new manufacturing plant. the plant has an

  The firm can sell a 15-year 1000 par value 8 percent bond

a firm has determined its optimal structure which is composed of the following sources and target market value

  What is the profit on new sales

The collection cost on these accounts is 5% of new sales, the cost of producing and selling is 78% of sales and the firm is in the 29% tax bracket. What is the profit on new sales?

  Variation and statistical thinking strategy

Compare and contrast the fundamental differences between special-cause variation and common-cause variation. Provide one (1) business process example of each variation to support your response.

  If you are going to be receiving annuity payments which

if you have to choose between 2 equally risk annuities each paying 5000 per year for 8 years. one is an annuity due

  What is the wacc for a company with after tax costs of

what is the wacc for a company with after tax costs of equity preferred and debt equal to 13 9 6 if equity makes up

  Microsoft is currently 30 per share suppose that the firm

microsoft is currently 30 per share. suppose that the firm announces a 2 for 3 stock change i.e. 3 shares today will

  What is avicorp pre-tax cost of debt

Avicorp has a $14.2 million debt outstanding, with a 6.1% coupon rate. The debt has semi-annual coupons, the next coupon is due in six months, and the debt matures in five years. It is currently priced at 94% of par value.

  Explain what is his wealth in paper

Explain what is his wealth in paper and cash for each level of desired dividend income level

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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