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What is the total market value of the company

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Reference no: EM132724451

You are an entrepreneur in a new epidemiology business. If the research is successful, the patent on the vaccine could sell for $ 80 million, and if not, it will be worth nothing. To fund the research, $ 20 million is needed as seed capital in exchange for 50% of the company's debt-free net worth.

a) What is the total market value of the company without leverage? If you can get a loan of 10 million dollars.

b) According to MM (Modigliani & Miller) Theory, how much of the company's equity will you need to sell to get the additional $ 10 million you need?

c) What is the value of your share of the company's equity with and without leverage?

Reference no: EM132724451

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