Reference no: EM133118502

Samantha Jones of Gorsuch Capital is considering investing in New'v'enture. What share of the company will she require today if her required rate of return is 50% per onum? If the company has 1,000,000 shares outstanding before the investment, how many new shares should she purchase? What will be the share price of the new shares? (Assume investment is in standard convertible preferred stock with no dividends and a conversion rate to common of 1:1) As she does her due diligence, Samantha Jones likes Thompson's plan, but thinks it naive in one respect: the company has not set aside an ESDP [Employee Stock Option Plan) to recruit a senior management team. Samantha believes Thompson will have to grant stock options in addition to the salaries projected in his business plan. From past experience, she thinks management should have the ability to own at least a 15% share ofthe company by the end of year 5. What share of the company should Samantha insist on today (her required rate of return is still 50%)?