What percentage of ownership is sold during the first round?

Assignment Help Business Management
Reference no: EM133629948

Question

Chemtech wants to have a venture investor inject $0.5 million at Year 0 and $1 million at Year 2. The founder has 300,000 shares. The founder expects to make a profit until Year 4 when the net income is expected to be $ 400,000. The common stock of Biosystems, a comparable firm, currently trades in the over the counter at $30 per share. Biosystems' net income for the most recent year was $300,000 and the firm has 150,000 shares of common stock outstanding.

Venture investors want a 50% and 30% compound annual rate of return for rounds 1 and 2, respectively.

1. What percentage of ownership is sold during the first round? During the second round?

2. How many shares will be issued in rounds 1 and 2?

3. If 6 percent of total equity in Year 4 is set aside for incentive compensation, what is the second-round share price?

Reference no: EM133629948

Questions Cloud

After tax present value of anticipated synergy : At the end of year 0, FreshGo acquired Yogurt Today at $30 million. Estimate the after tax present value of the anticipated synergy.
Explain volatility and how it effects option pricing : Explain volatility and how it effects option pricing. Briefly explains option value sensitivity measures such as Delta and Vega.
What are the net proceeds to company : The administrative costs are $425,000. What are the net proceeds to the company?
Risk-free rate is the yield on safe investment : The risk-free rate is the yield on a safe investment, like government bonds.
What percentage of ownership is sold during the first round? : What percentage of ownership is sold during the first round? How many shares will be issued in rounds 1 and 2?
Calculate the Dividend Yield and Capital Gains Yield : Calculate the expected dividends for 2023 through 2028. Calculate the Dividend Yield and the Capital Gains Yield respectively.
Calculate required income : Calculate required income? What is the required income? (Starting point not given, estimate it from present income and expenditures)
Bonds have annual coupon rate : DaVita Inc bonds have an annual coupon rate of 5.125% and a par value of $1,000 and will mature in 4 years.
Toni requires personal loan : Toni requires a personal loan for $3,000 with monthly payments. Less interest is charged over a 2-year period than over a 1-year period.

Reviews

Write a Review

Business Management Questions & Answers

  Plan to manage working capital between operations in asia

How would you plan to manage working capital between operations in Asia, the US and Europe? What would be important to you?

  Advantages of using nano server

Name two or three advantages of using Nano Server with your Windows 2016 Server.

  Disadvantage of big data translate to negative behavior

Does the disadvantage of big data translate to negative behavior or vice versa?

  Describe ethical and privacy issues a business

Describe any ethical and privacy issues a business would need to address with the client before handing over a Decision Support System for implementation.

  Interest rates which are now lower than foreign countries

If the federal reserve of the United States lowers interest rates which are now lower than foreign countries, what would happen to the supply and demand?

  Is money a motivator in the workplace

Is money a motivator in the workplace? Why or why not? . Do you think money motivates CEOs more or less than employees within the same companies?

  What is the goal of information security

Managing users, assets, and access are essential elements of network management. What is the goal of information security?

  Health care law unit i assessment

We have read about medical etiquette standards and ethics. What is the difference between medical etiquette and ethics? Provide examples and explain why it is necessary to understand this distinction. Your response should be at least 200 words in ..

  Elevator pitches-case discussions

This task this assessment is primarily about 'doing' management work through structured conversations submitted on Turnitin.

  Determine marketing channel structure

Determine the marketing channel structure used by the organization. Defend the organization's choice or advocate for a different channel structure.

  What motivates hackers to attack computer networks

Why is understanding hacking, exploitation, vulnerabilities, and attacks critically important? What motivates hackers to attack computer networks?

  Four-Phase Process-Law Legal with using Microsoft Word

Tim Trainer has been asked to come in and help administrative assistants at Law Legal with using Microsoft Word.

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