Question 3. Based on the following scenario answer Parts A, B, and C. In part A...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Question 3. Based on the following scenario answer Parts A, B, and C. In part A you will be required to calculate the percent ownership that you will need to give to an outside investor group. In part B you will be required to calculate the total number of shares of stock based on the percent of ownership that you calculated in part A. In part C you will be required to calculate the price per share of the stock that will be derived from your answer in parts A & B. Please note that parts B and C will be graded based on the inputs that you derived from the prior parts. If these inputs were incorrect you will still receive full credit for parts B and C if you show me in the below text box that you used the correct method to solve the question. Scenario: Company A is projected to have equity cash flow of $10,000,000 in year 3. Similar companies have sold for 8X their cash flows giving Company A a projected valuation for $80,000,000 in year 3. Part A. Assuming a 1 round funding scenario, if an investor invests $5,000,000 at the beginning of year 1 (time 0) and requires a 20% return on his/her investment, what is the ownership percentage in the firm that the entrepreneur will want to give to the investor if the firm is sold at the projected amount in year 3? Please input your answer to two decimal places without the % sign and roundup (for example if answer is 10.56% input as .11) Part B. If there are 1,000,000 shares of stock outstanding before the first round of funding, how many shares of stock will be given to the investor in the first round of funding? Please input your answer in the xx,xxx format and round up to the nearest whole number. Part C. What is the price per share of the stock in the first round of funding? Please input your answer in the $xx.xx format and round up to the nearest cent Question 3. Based on the following scenario answer Parts A, B, and C. In part A you will be required to calculate the percent ownership that you will need to give to an outside investor group. In part B you will be required to calculate the total number of shares of stock based on the percent of ownership that you calculated in part A. In part C you will be required to calculate the price per share of the stock that will be derived from your answer in parts A & B. Please note that parts B and C will be graded based on the inputs that you derived from the prior parts. If these inputs were incorrect you will still receive full credit for parts B and C if you show me in the below text box that you used the correct method to solve the question. Scenario: Company A is projected to have equity cash flow of $10,000,000 in year 3. Similar companies have sold for 8X their cash flows giving Company A a projected valuation for $80,000,000 in year 3. Part A. Assuming a 1 round funding scenario, if an investor invests $5,000,000 at the beginning of year 1 (time 0) and requires a 20% return on his/her investment, what is the ownership percentage in the firm that the entrepreneur will want to give to the investor if the firm is sold at the projected amount in year 3? Please input your answer to two decimal places without the % sign and roundup (for example if answer is 10.56% input as .11) Part B. If there are 1,000,000 shares of stock outstanding before the first round of funding, how many shares of stock will be given to the investor in the first round of funding? Please input your answer in the xx,xxx format and round up to the nearest whole number. Part C. What is the price per share of the stock in the first round of funding? Please input your answer in the $xx.xx format and round up to the nearest cent
Expert Answer:
Answer rating: 100% (QA)
Answer Step 1 ANSWER According to collect from the data Let us assume that the data as followed by ... View the full answer
Related Book For
Essentials Of Business Statistics
ISBN: 9780078020537
5th Edition
Authors: Bruce Bowerman, Richard Connell, Emily Murphree, Burdeane Or
Posted Date:
Students also viewed these mathematics questions
-
In this module you will be required to record: (1) payment of a short-term note, (2) write of a bad debt using the direct write-off method, (3) collection of a short-term note receivable, (4) sale of...
-
In this assignment you will be required to complete tasks related to job costing. Download the document, complete the required information, save the document, and submit the assignment in Blackboard....
-
Determine the displacement of block A during a five-second interval if drum B wraps the cable around itself at a constant rate of 0.15 m/s and drum C wraps cable around itself at a constant rate of...
-
The homogeneous rectangular block having dimensions a-1.93, b=2.75 as shown, and mass m, rests on the inclined plane which is hinged about a horizontal axis through O. Calculate the minimum value of...
-
The following projected income statement for More-Power Company is repeated for your convenience. Recall that the projection is based on sales of 75,000 regular sanders and 30,000 mini-sanders....
-
What is peak-load pricing? What characteristics of market demand make a service product an appropriate candidate for this price-segmentation technique?
-
Which would not be one of the six legs on the six-legged table of financial statements? a. The IRS b. Management c. External auditors d. PCAOB e. Board of Directors
-
Presented below is the December 31 trial balance of New York Boutique. Instructions(a) Construct T-accounts and enter the balances shown.(b) Prepare adjusting journal entries for the following and...
-
Leist Clinic uses client-visits as its measure of activity.During September, the clinic budgeted for 2,200 client-visits, butits actual level of activity was 2,170 client-visits. The clinichas prov 2...
-
John Henderson's will provides for the creation of a trust for the benefit of Holly Jones. Under the specific terms, the trust is required to distribute to Holly $50,000 cash and 1,000 shares of IBM...
-
. Debit Credit statements from the Cash . $ 30,000 adjusted trial balance Accounts receivable 52,000 P5 Interest receivable . . . . . 18,000 Notes receivable (due in 90 days) . . . 168,000 Office...
-
What are some of the methods of enculturation used in your society? Give an example of how your own personality has been affected by enculturation.
-
A sleeve-bearing machine is running up to speed, and as it passes through a known critical frequency, vibration at the critical frequency starts to occur, and even though the machine continues to...
-
Power plants need extremely accurate speeds on their turbine generators. One customer had two generators running side by side, and the time between maximum beats was 2 hours. Calculate the beat...
-
The following are methods used to evaluate public health data and scientifc evidence except a. Use of standard criteria by experts b. By combining the results of multiple scientifc studies that are...
-
Discuss the differences between animal and human behavior. After reading this chapter, do you believe that humans have instincts?
-
conscience clause: Is there an ethical framework for handling situations where one party will prevail over another?
-
Determine whether the lines are parallel, perpendicular, or neither. 2x + 3y = -12, 2y - 3x = 8
-
Consumer Reports (January 2005) indicates that profit margins on extended warranties are much greater than on the purchase of most products. In this exercise we consider a major electronics retailer...
-
Define the meaning of the terms response variable, factor, treatments, and experimental units.
-
Again consider the situation of Exercise summarizes auditor positions regarding proposed changes in accounting standards that would decrease client firms reported earnings. Determine whether the...
-
Consider a game \(G\) in strategic form. Recall that the commitment game derived from \(G\) is defined by letting player I choose one of his strategies \(x\), which is then announced to player II,...
-
Consider the following two game trees (a) and (b). Payoffs have been omitted because they are not relevant for the question. In each case, how many strategies does each player have? How many reduced...
-
Consider the following three-player game tree. At a leaf, the topmost payoff is to player I, the middle payoff is to player II, and the bottom payoff is to player III. (a) How many strategy profiles...
Study smarter with the SolutionInn App