What is the issue price per share and pre-money valuation

Assignment Help Financial Management

Reference no: EM131323419

A potential investor is seeking to invest $500,000 in a venture, which currently has 1,000,000 shares held by its founders, and is targeting a 50% return five years from now. The venture is expected to produce half a million dollars in income per year at year 5. It is known that a similar venture recently produced $1,000,000 in income and sold shares to the public for $10,000,000.

a. What is the percent ownership of our venture that must be sold in order to provide the venture investor’s target return?

b. What is the number of shares that must be issued to the new investor in order for the investor to earn his target return?

c. What is the issue price per share?

d. What is the pre-money valuation?

e. What is the post-money valuation?

Reference no: EM131323419

Questions Cloud

How do researchers detect and eliminate placebo effects : Should demand characteristics be eliminated or strengthened in an experiment? Explain.

Advantages and disadvantages of an interest rate collar : Explain how the Black model, which is designed for pricing options on futures contracts, can be used for pricing interest rate options.

Explain the importance of the project charter : Explain the importance of the project charter. Why is this document critical to a project? What information should be contained in a charter?

Explain how a forward swap is like a swaption : Explain how a bank could use a swaption to hedge the possibility that it will enter into a pay floating, receive-fixed swap at a later date ?

What is the issue price per share and pre-money valuation : A potential investor is seeking to invest $500,000 in a venture, which currently has 1,000,000 shares held by its founders, and is targeting a 50% return five years from now. The venture is expected to produce half a million dollars in income per yea..

Create a marketing proposal for the product : As the marketing manager, you have been asked to create a marketing proposal for the product or industry you selected. In your introduction, give a history of the product or industry you have selected earlier. Who are the key competitors?In the b..

What are the effects on equities : What is the effect upon carrying value and earnings for the scenario presented - What are the effects on equities?

Is there any chance of governmental variables at play : Based on the four points of the diamond, are firms likely to be successful? Is there any chance of governmental variables at play in your industry or country? If so, how might they improve or detract from national advantage?

Determine the annualized cost of the loan : Determine the annualized cost of the loan for each of the given outcomes. Interest is based on 90 days and a 360-day year.

User Account

All Pages