What actual return venture capital gets

Assignment Help Financial Management
Reference no: EM131155779

Question:-

Skater Paradise provided funding for Swim Up start-up by investing convertible preferred shares. Swim Up expects to go public in 5 years, at which time it expects to have a post IPO valuation of $ 4 Billion. Until the company goes public, preferred shares will pay 7% annual dividend.

a. What percentage of post IPO equity should Venture Capital's shares to be converted in to provide Venture Capital its expected return?

b. Assume that the percentage ownership agreement remains the same as in a. What actual return Venture Capital gets, if the IPO value is $ 14 billion? 1 Billion? What if instead of an IPO, the company is acquired at $400 Million in 5 years? Remember that Skater Paradise have convertible preferred shares.

Attachment:- Problem sheet.rar

Reference no: EM131155779

Questions Cloud

Review the comprehensive annual financial report : Review the Comprehensive Annual Financial Report (CAFR) for 2013 from the city of Cedar Rapids, Iowa, and answer the following questions.
Organizational climate that supports innovation : In developing an organizational climate that supports innovation, management often overlooks critical issues. This is true especially when setting up and nurturing communication networks.
Definitions of virtual supply chains : Locate two articles on the topic of virtual supply chains. Synthesize each article into a one-page summary using your own words. Include the following: Definitions of virtual supply chains and How virtual supply chains function
How can transitions be used in a slide presentation : How can transitions be used in a slide presentation? How can timings be used in a slide presentation? Provide a real-world example of using a transition and timing settings in a slide presentation.
What actual return venture capital gets : What percentage of post IPO equity should Venture Capital's shares to be converted in to provide Venture Capital its expected return?
Discuss tools and techniques to remove malware : Discuss tools and techniques to remove Malware from infected machines; using a popular product to make your point
Identify the root-cause of the problem during the project : Select one (1) project from your working or educational environment in which you can apply problem solving framework. Next, suggest at least three (3) questions that you would ask yourself in order to identify the root-cause of the problem during ..
Create a six slides presentation for a potential employer : Create a presentation, 4-6 slides in length, for a potential employer. Include an introduction slide and at least 2 slides highlighting your skills and experience.
Discuss the outcomes of a change management plan : Read the article entitled "Leadership Excellence: Communicate Your Vision". Next, assess the consequences of leaders not being able to communicate their change vision. Discuss the outcomes of a change management plan with an under-communicated vis..

Reviews

Write a Review

Financial Management Questions & Answers

  What are just-in-time inventory models

How does the firm's required rate of return on investment enter into inventory decisions? What are just-in-time inventory models?

  Determine whether high or low reserves are present

You are given a 50 percent probability that oil reserves (discounted revenues) are 80 million dollars and a 50 percent probability that oil reserves are 60 million dollars. It costs 50 million dollars to drill. Once a well is drilled, all drilling co..

  Zero-coupon bonds could be bought for the lowest price

Which of the following risk-free, zero-coupon bonds could be bought for the lowest price?

  What is the value of the bondholders call option

A 10-year maturity convertible bond with a face value of $1,000 and a 6% coupon on a company with a bond rating of Aaa is selling for $1,050. The bond pays interest annually. Each bond can be exchanged for 20 shares, and the stock price currently is ..

  The standard deviation of stock returns for stock

The standard deviation of stock returns for Stock A is 40%. The standard deviation of the market return is 20%. If the correlation between Stock A and the market is 0.70, then what is Stock A's beta?

  What is project financing

What is project financing? Discuss the difference between the project financing and the conventional direct financing and the advantages of project financing

  Show calculations relating to depreciation and gains tax

Your business just bought a brand new boat, in year zero, to help with underwater lumber recover. The boat, a ten-year asset, cost $1,500,000. The boat requires less crew and is more fuel efficient reducing fuel and operating costs from $3.5M per yea..

  What is each bonds expected capital gains yield today

Use the following corporate bond quote information to answer the questions that follows. since this is a corporate bond, assume the company makes semi-annual coupon payments and also assume the bond matures on today's date in its maturity year. What ..

  Measure for an asset held in a diversified portfolio

Which is the best measure of risk for a single asset held in isolation, and which is the best measure for an asset held in a diversified portfolio?

  After-tax yield on the preferred stock

Van Dyke Corporation has a corporate tax rate equal to 36%. The company recently purchased preferred stock in another company. The preferred stock has a 7.5% before-tax yield. What is Van Dyke’s after-tax yield on the preferred stock? Assume a 70% di..

  Assembling and marketing multi-featured camera

Which of the following set of actions are unlikely to help a company achieve a differentiation based competitive advantage over some/many of its camera rivals when it comes to assembling and marketing multi-featured camera?

  What conclusion can be made at the significance level

What conclusion can be made at the 10% significance level? How about at the 5% significance 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!

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