What is the present value of the export-import company

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Question - A company investor wants to invest $2.5 million in the Company Export Import that you have which has been in operation for the past seven months. You do not expect to make a profit until the 5th year, and when your net income is expected to $5,000,000. For Common Stock, Export-Import where comparable companies are currently it is traded on the free market at $50 per share. Net profit export-import last year was $500,000 and the company has 200,000 shares of common stock circulated.

Required -

a. Apply the VC method to determine the value of the Export Import Corporation at the end five years.

b. If a venture capitalist wants a compound annual rate of return 30% for a similar investment, what is the present value of the Export-Import Company's business?

Reference no: EM133040806

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