Answer options are: 521 million 1,021 million 1,188 million 1,688 million 2355 million zero The following is
Fantastic news! We've Found the answer you've been seeking!
Question:
Answer options are:
521 million
1,021 million
1,188 million
1,688 million
2355 million
zero
Transcribed Image Text:
The following is roughly true (believe it or not): Microstrategy is a B2B business intelligence software company founded, and run for many years, by eccentric 'Bitcoin Maximalist' Michael Saylor. Saylor is a prior MIT engineering grad, and self- made billionaire who became an ardent believer in Bitcoin around mid-2020 and has leveraged most of his 10-figure personal net worth and entire business net worth on Bitcoin. Saylor holds about 20,000 Bitcoin personally and Microstrategy, as a business, holds about 130,000 Bitcoin. Saylor owns 17% of Microstrategy. Assume Bitcoin is currently trading at $17,000 per BTC. Also, assume Microstrategy has about $500 million of total assets beyond Bitcoin, and that these other assets are simply cash (USD). Finally, assume Microstrategy has $2.3 Billion in debt, almost all of which was sold so that the company could purchase more Bitcoin, and that all of Microstrategy's debt is fixed-rate and maturing in 5 years. Also, the risk-free rate is 4%. Bitcoin's volatility is currently around 60% per year. What is the value of Microstrategy, valuing the business as a "real option" based on its Bitcoin holdings and current amount of debt (hint: how could the $500 million of cash be added into/seperated from this valuation to get the business' total value)? The following is roughly true (believe it or not): Microstrategy is a B2B business intelligence software company founded, and run for many years, by eccentric 'Bitcoin Maximalist' Michael Saylor. Saylor is a prior MIT engineering grad, and self- made billionaire who became an ardent believer in Bitcoin around mid-2020 and has leveraged most of his 10-figure personal net worth and entire business net worth on Bitcoin. Saylor holds about 20,000 Bitcoin personally and Microstrategy, as a business, holds about 130,000 Bitcoin. Saylor owns 17% of Microstrategy. Assume Bitcoin is currently trading at $17,000 per BTC. Also, assume Microstrategy has about $500 million of total assets beyond Bitcoin, and that these other assets are simply cash (USD). Finally, assume Microstrategy has $2.3 Billion in debt, almost all of which was sold so that the company could purchase more Bitcoin, and that all of Microstrategy's debt is fixed-rate and maturing in 5 years. Also, the risk-free rate is 4%. Bitcoin's volatility is currently around 60% per year. What is the value of Microstrategy, valuing the business as a "real option" based on its Bitcoin holdings and current amount of debt (hint: how could the $500 million of cash be added into/seperated from this valuation to get the business' total value)?
Expert Answer:
Answer rating: 100% (QA)
SOLUTION 2355 Million The value of Microstrategy valuing the ... View the full answer
Related Book For
Modern Database Management
ISBN: 978-0133544619
12th edition
Authors: Jeff Hoffer, Ramesh Venkataraman, Heikki Topi
Posted Date:
Students also viewed these accounting questions
-
Options are popular instruments in the world of finance. A call option on a stock gives the owner the right to buy the stock at a predetermined price before the expiration date of the option. For...
-
Are international organizational options for implementing an international strategy just special cases of the M-form structure, with slightly different emphases, or are these international...
-
Options on General Motors stock are on a March, June, September, and December cycle. What options trade on (a) March 1, (b) June 30, (c) August 5?
-
The pressure at the bottom of a swimming pool is evenly distributed. Suppose we look at a cast iron plate of 7272 kg lying on the ground with an area of 100 m2. What is the average pressure below...
-
Greenwood Company of Omaha, Nebraska, provides liquid fertilizer and herbicides to regional farmers. On July 31, 2010, the companys cash account per its general ledger showed a balance of $5,909.70....
-
Discuss the reasons why new brands with a smaller market share spend proportionately more on advertising than brands with a larger market share.
-
Sarah Jones, the manager of the Teen Division of Eve Clothing Company, was evaluating the acquisition of a new embroidery machine. The budgeted operating income of the Teen Division was \(\$...
-
Petromax Enterprises uses a continuous review inventory control system for one of Its SKUs. The following information is available on the item. The firm operates 50 weeks in a year. Demand = 50.000...
-
D Question 23 2 pts Based on Alphabet's 10K for FY2019, as of December 31, 2019, Alphabet states that its employees are among their best assets and are critical for their continued success. For FY...
-
Reconstruct the following syllogistic forms and use the five rules for syllogisms to determine if they are valid from the Boolean standpoint, conditionally valid from the Aristotelian standpoint, or...
-
Paul and Alice file a joint return for 2023. Bob and April are Paul's parents and would qualify as dependents except that they file a joint return. Paul and Alice paid the following medical expenses...
-
1.Using 61 monthly observations you have just estimated that the covariance between return on stock A and the market index is 0.075 and that the standard deviation of the market index is 0.25. Also,...
-
Cost of goods sold for the Toronto Corporation for the month of June 20X6 was $800,000. Work in process inventory at the end of June was 75% of work in process inventory at the beginning of June....
-
Amman Company has three production lines, Production Line 1, Production Line 2 and Production Line 3. The management of the company has decided to close Production Line 3 from company's operations...
-
In the constant growth model, if the price of a stock today (Po) is $30 and the dividend of the stock is expected to grow at a rate of 10% each year, what will be the price of the stock three years...
-
Question 1: Discuss how we define anatomically modern humans (AMH). What implications might the descent of AMH have for evolutionary theories of human psychology? Question 2: In what sense is there a...
-
The Fitness Studio, Inc.'s, 2021 income statement lists the following income and expenses: EBITDA = $929,000, EBIT = $775,000, interest expense = $106,000, and taxes = $234,150. The firm has no...
-
At 31 December 20X9, the end of the annual reporting period, the accounts of Huron Company showed the following: a. Sales revenue for 20X9, $ 2,950,000, of which one- quarter was on credit. b....
-
Explain how creating a view may increase data security. Also explain why one should not rely completely on using views to enforce data security.
-
For each of the following relations, indicate the normal form for that relation. If the relation is not in third normal form, decompose it into 3NF relations. Functional dependencies (other than...
-
Describe an example in which you would want to use a derived table.
-
Repeat 6.19 using \(x(0)=-2\).
-
Using the compact storage technique described in Section 6.8, determine the vectors DIAG, OFFDIAG, COL, and ROW for the following matrix: \[\mathbf{S}=\left[\begin{array}{cccccc}17 & -9.1 & 0 & 0 &...
-
Expand $6 \sqrt{\Pi_{k=1}^{3} \Pi_{m=1^{\prime}}^{2^{\prime}} D_{k m}}$
Study smarter with the SolutionInn App