Ysom, Inc. was founded in 2015 by Professor Shin at Yonsei University and Professor Lee at...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Ysom, Inc. was founded in 2015 by Professor Shin at Yonsei University and Professor Lee at Severance Hospital which is an affiliate institute of Yonsei University. The company manufactures sleep disorder diagnostic instruments. Yonsei Corp. expected rapid growth because of Korean population structure where the number of people over 65 years old increases sharply. The similar population structure and change are expected in China as well. The company is equally owned by Prof. Shin and Prof. Lee. The original partnership agreement between the professors gave each of them 50,000 shares of stock. Ysom's sales have picked up recently, and Ysom is considering a major expansion. Ysom's plans include selling its instruments to individuals. Ysom's expansion plans require a significant investment, which the company plans to finance with a combination of additional funds from outsiders and money borrowed from banks. It is natural that the new investors and creditors require organized and detailed financial statements. After rooting through old bank statements, sales receipts, tax returns, and other records, Ysom has assembled the following information. 2014 2015 $380,000 $470,000 $200,000 $250,000 $30,000 $40,000 Selling and Administrative expenses $38,000 $50,000 $55,000 $63,000 $20,000 $34,000 $12,000 $14,000 $240,000 $280,000 $20,000 $26,000 $23,000 $26,000 $38,000 $52,000 $0 $13,680 $123,000 $140,000 Sales Cost of goods sold Cash Depreciation Accounts payable Interest expense Net fixed assets Accounts receivable Notes payable Inventory New Equity Long-term debt Ysom recently pays out 40 percent of net income as dividends to Prof. Shin and Prof. Lee and has a 40% tax rate. You are asked to prepare the following: 1. An income statement for 2014 and 2015. 2. A balance sheet for 2014 and 2015. 3. Operating cash flow for each year. 4. Cash flow from assets for 2015. 5. Cash flow to creditors for 2015. 6. Cash flow to stockholders for 2015. 7. Let's assume that Ysom's expected earnings in 2020 is 10 times of the 2015 net income, comparable companies' PE ratio is 20 time, and VC's require rate of return is 50%. Answer to the following questions. a. Calculate FV of new equity. b. Calculate the value of Ysom in 2020. c. Calculate VC's ownership. d. How many shares should Ysom give to the VC? e. What price per share should VC agree to pay? f. What is the pre-money valuation of the firm? g. What is the post-money valuation of the firm? h. What is the Professor Shin's carried interest? 8. In question 7, we assumed that one round of financing is sufficient until 2020. In this question, let's assume that Ysom requires additional funding of 50,000 dollars in 2 years to commercialize its prototype. The VC's required rate of return for this round of investment is 30% and its investment period is 3 years. Answer to the following questions. a. Calculate FV of each round of investment. b. Calculate the value of Ysom in 2020. c. Calculate VC's ownership in each round. d. Calculate the first round VC's retention ratio. e. Calculate the percent ownership the first round VC holds as of VC's investment (which is called the current percent ownership). How many shares should Ysom give to the first round VC? f. g. What price per share should the first round VC agree to pay? h. Calculate Shares outstanding before round 2. i. How many shares should Ysom give to the second round VC? j. Calculate Shares outstanding after round 2. k. What price per share should the second round VC agree to pay? I. What is terminal share price? m. Calculate IRR of each round of investment. 2 Sales Cost of goods sold Cash 5 Selling and Administrative expenses 5 Depreciation Accounts payable Interest expense Net fixed assets 3 9 0 Accounts receivable 1 Notes payable 2 Inventory 3 New Equity 4 Long-term debt 5 6 Ysom Inc. 7 Income Statement 8 Sales 9 Cost of goods sold O Selling and Administrative expenses 1 Depreciation 2 Earnings before interest and taxes 3 Interest paid 4 Taxable income 5 Taxes (40%) 6 Net income 7 Dividends (40%) 8 Addition to retained earnings 2014 $380,000 $200,000 $30,000 $38,000 $55,000 $20,000 $12,000 $240,000 $20,000 $23,000 $38,000 $0 $123,000 2014 $380,000 $200,000 $38,000 $55,000 $12,000 2015 $470,000 $250,000 $40,000 $50,000 $63,000 $34,000 $14,000 $280,000 $26,000 $26,000 $52,000 $140,000 2015 $470,000 $250,000 $50,000 $63,000 $14,000 30 Ysom Inc. 31 Balance Sheets 32 Cash 33 Accounts receivable 34 Inventory 35 Current assets 36 Net fixed assets 37 38 Total assets 39 2014 $30,000 $20,000 $38,000 $240,000 2015 $40,000 Notes payable $26,000 Accounts payable $52,000 Current liabilities $280,000 Long-term debt Equity Total liabilities and shareholder's equity 2014 2015 $23,000 $26,000 $20,000 $34,000 $123,000 $140,000 -0 Ysom Inc. -1 Operating Cash Flow 2 Earnings before interest and taxes 3 +Deprecition 4- Taxes 5 Operating cash flow 6 -7 Ysom Inc. -8 Net Capital Spending 9 Increase in net fixed assets -0 +Depreciation 1 Net capital spending -2 3 Ysom Inc.. 4 -5 Ending NWC 6 - Beginning NWC 7 Change in NWC -8 Change in NWC 9 Ysom Inc. 50 Cash Flow from Assets 1 Operating cash flow 2- Net capital spending - Change in NWC 3 4 Cash Flow from Assets GS 6 Ysom Inc. 7 Cash Flow to Creditors 8 Interest paid 9- Net new borrowing "O Cash flow to creditors "1 2 Ysom Inc. 3 Cash Flow to Stockholders 4 Dividends paid 5-Net new equity raised 6 Cash flow to stockholders "7 8 FV of new equity at 50% return in 2020 9 Value of Ysom in 2020 0 VC's ownership 1 New shares to the VC =2 3 Price per share VC to pay 4 Pre-money valuation of the firm Post-money valuation of the firm Professor Shin's carried interest :5 :6 =7 8 FV of the first round investment at 50% return 9 Value of Ysom in 2020 0 The first round VC's ownership 1 2014 $0 $55,000 $0 FV of the second round investment of 2 $50,000 at 30% return for 3 years 3 Value of Ysom in 2020 4 The second round VC's ownership 5 16 The first round VC's retention ratio 7 The first round VC's current percent ownership 8 19 New shares to the first round VC 00 Price per share the first round VC to pay 01 Shares outstanding before round 2 02 New shares to the second round VC 03 Shares outstanding after round 2 04 Price per share the second round VC to pay 05 06 Terminal share price 07 IRR for the second round VC 09 IRR for the first round VC LO 2015 $0 $63,000 $0 2015 $40,000 $63,000 2015 $0 $0 2015 $0 $0 $0 2015 $14,000 $17,000 2015 $0 $0 Ysom, Inc. was founded in 2015 by Professor Shin at Yonsei University and Professor Lee at Severance Hospital which is an affiliate institute of Yonsei University. The company manufactures sleep disorder diagnostic instruments. Yonsei Corp. expected rapid growth because of Korean population structure where the number of people over 65 years old increases sharply. The similar population structure and change are expected in China as well. The company is equally owned by Prof. Shin and Prof. Lee. The original partnership agreement between the professors gave each of them 50,000 shares of stock. Ysom's sales have picked up recently, and Ysom is considering a major expansion. Ysom's plans include selling its instruments to individuals. Ysom's expansion plans require a significant investment, which the company plans to finance with a combination of additional funds from outsiders and money borrowed from banks. It is natural that the new investors and creditors require organized and detailed financial statements. After rooting through old bank statements, sales receipts, tax returns, and other records, Ysom has assembled the following information. 2014 2015 $380,000 $470,000 $200,000 $250,000 $30,000 $40,000 Selling and Administrative expenses $38,000 $50,000 $55,000 $63,000 $20,000 $34,000 $12,000 $14,000 $240,000 $280,000 $20,000 $26,000 $23,000 $26,000 $38,000 $52,000 $0 $13,680 $123,000 $140,000 Sales Cost of goods sold Cash Depreciation Accounts payable Interest expense Net fixed assets Accounts receivable Notes payable Inventory New Equity Long-term debt Ysom recently pays out 40 percent of net income as dividends to Prof. Shin and Prof. Lee and has a 40% tax rate. You are asked to prepare the following: 1. An income statement for 2014 and 2015. 2. A balance sheet for 2014 and 2015. 3. Operating cash flow for each year. 4. Cash flow from assets for 2015. 5. Cash flow to creditors for 2015. 6. Cash flow to stockholders for 2015. Ysom, Inc. was founded in 2015 by Professor Shin at Yonsei University and Professor Lee at Severance Hospital which is an affiliate institute of Yonsei University. The company manufactures sleep disorder diagnostic instruments. Yonsei Corp. expected rapid growth because of Korean population structure where the number of people over 65 years old increases sharply. The similar population structure and change are expected in China as well. The company is equally owned by Prof. Shin and Prof. Lee. The original partnership agreement between the professors gave each of them 50,000 shares of stock. Ysom's sales have picked up recently, and Ysom is considering a major expansion. Ysom's plans include selling its instruments to individuals. Ysom's expansion plans require a significant investment, which the company plans to finance with a combination of additional funds from outsiders and money borrowed from banks. It is natural that the new investors and creditors require organized and detailed financial statements. After rooting through old bank statements, sales receipts, tax returns, and other records, Ysom has assembled the following information. 2014 2015 $380,000 $470,000 $200,000 $250,000 $30,000 $40,000 Selling and Administrative expenses $38,000 $50,000 $55,000 $63,000 $20,000 $34,000 $12,000 $14,000 $240,000 $280,000 $20,000 $26,000 $23,000 $26,000 $38,000 $52,000 $0 $13,680 $123,000 $140,000 Sales Cost of goods sold Cash Depreciation Accounts payable Interest expense Net fixed assets Accounts receivable Notes payable Inventory New Equity Long-term debt Ysom recently pays out 40 percent of net income as dividends to Prof. Shin and Prof. Lee and has a 40% tax rate. You are asked to prepare the following: 1. An income statement for 2014 and 2015. 2. A balance sheet for 2014 and 2015. 3. Operating cash flow for each year. 4. Cash flow from assets for 2015. 5. Cash flow to creditors for 2015. 6. Cash flow to stockholders for 2015. 7. Let's assume that Ysom's expected earnings in 2020 is 10 times of the 2015 net income, comparable companies' PE ratio is 20 time, and VC's require rate of return is 50%. Answer to the following questions. a. Calculate FV of new equity. b. Calculate the value of Ysom in 2020. c. Calculate VC's ownership. d. How many shares should Ysom give to the VC? e. What price per share should VC agree to pay? f. What is the pre-money valuation of the firm? g. What is the post-money valuation of the firm? h. What is the Professor Shin's carried interest? 8. In question 7, we assumed that one round of financing is sufficient until 2020. In this question, let's assume that Ysom requires additional funding of 50,000 dollars in 2 years to commercialize its prototype. The VC's required rate of return for this round of investment is 30% and its investment period is 3 years. Answer to the following questions. a. Calculate FV of each round of investment. b. Calculate the value of Ysom in 2020. c. Calculate VC's ownership in each round. d. Calculate the first round VC's retention ratio. e. Calculate the percent ownership the first round VC holds as of VC's investment (which is called the current percent ownership). How many shares should Ysom give to the first round VC? f. g. What price per share should the first round VC agree to pay? h. Calculate Shares outstanding before round 2. i. How many shares should Ysom give to the second round VC? j. Calculate Shares outstanding after round 2. k. What price per share should the second round VC agree to pay? I. What is terminal share price? m. Calculate IRR of each round of investment. 7. Let's assume that Ysom's expected earnings in 2020 is 10 times of the 2015 net income, comparable companies' PE ratio is 20 time, and VC's require rate of return is 50%. Answer to the following questions. a. Calculate FV of new equity. b. Calculate the value of Ysom in 2020. c. Calculate VC's ownership. d. How many shares should Ysom give to the VC? e. What price per share should VC agree to pay? f. What is the pre-money valuation of the firm? g. What is the post-money valuation of the firm? h. What is the Professor Shin's carried interest? 8. In question 7, we assumed that one round of financing is sufficient until 2020. In this question, let's assume that Ysom requires additional funding of 50,000 dollars in 2 years to commercialize its prototype. The VC's required rate of return for this round of investment is 30% and its investment period is 3 years. Answer to the following questions. a. Calculate FV of each round of investment. b. Calculate the value of Ysom in 2020. c. Calculate VC's ownership in each round. d. Calculate the first round VC's retention ratio. e. Calculate the percent ownership the first round VC holds as of VC's investment (which is called the current percent ownership). How many shares should Ysom give to the first round VC? f. g. What price per share should the first round VC agree to pay? h. Calculate Shares outstanding before round 2. i. How many shares should Ysom give to the second round VC? j. Calculate Shares outstanding after round 2. k. What price per share should the second round VC agree to pay? I. What is terminal share price? m. Calculate IRR of each round of investment. 2 Sales Cost of goods sold Cash 5 Selling and Administrative expenses 5 Depreciation Accounts payable Interest expense Net fixed assets 3 9 0 Accounts receivable 1 Notes payable 2 Inventory 3 New Equity 4 Long-term debt 5 6 Ysom Inc. 7 Income Statement 8 Sales 9 Cost of goods sold O Selling and Administrative expenses 1 Depreciation 2 Earnings before interest and taxes 3 Interest paid 4 Taxable income 5 Taxes (40%) 6 Net income 7 Dividends (40%) 8 Addition to retained earnings 2014 $380,000 $200,000 $30,000 $38,000 $55,000 $20,000 $12,000 $240,000 $20,000 $23,000 $38,000 $0 $123,000 2014 $380,000 $200,000 $38,000 $55,000 $12,000 2015 $470,000 $250,000 $40,000 $50,000 $63,000 $34,000 $14,000 $280,000 $26,000 $26,000 $52,000 $140,000 2015 $470,000 $250,000 $50,000 $63,000 $14,000 2 Sales Cost of goods sold Cash 5 Selling and Administrative expenses 5 Depreciation Accounts payable Interest expense Net fixed assets 3 9 0 Accounts receivable 1 Notes payable 2 Inventory 3 New Equity 4 Long-term debt 5 6 Ysom Inc. 7 Income Statement 8 Sales 9 Cost of goods sold O Selling and Administrative expenses 1 Depreciation 2 Earnings before interest and taxes 3 Interest paid 4 Taxable income 5 Taxes (40%) 6 Net income 7 Dividends (40%) 8 Addition to retained earnings 2014 $380,000 $200,000 $30,000 $38,000 $55,000 $20,000 $12,000 $240,000 $20,000 $23,000 $38,000 $0 $123,000 2014 $380,000 $200,000 $38,000 $55,000 $12,000 2015 $470,000 $250,000 $40,000 $50,000 $63,000 $34,000 $14,000 $280,000 $26,000 $26,000 $52,000 $140,000 2015 $470,000 $250,000 $50,000 $63,000 $14,000 30 Ysom Inc. 31 Balance Sheets 32 Cash 33 Accounts receivable 34 Inventory 35 Current assets 36 Net fixed assets 37 38 Total assets 39 2014 $30,000 $20,000 $38,000 $240,000 2015 $40,000 Notes payable $26,000 Accounts payable $52,000 Current liabilities $280,000 Long-term debt Equity Total liabilities and shareholder's equity 2014 2015 $23,000 $26,000 $20,000 $34,000 $123,000 $140,000 30 Ysom Inc. 31 Balance Sheets 32 Cash 33 Accounts receivable 34 Inventory 35 Current assets 36 Net fixed assets 37 38 Total assets 39 2014 $30,000 $20,000 $38,000 $240,000 2015 $40,000 Notes payable $26,000 Accounts payable $52,000 Current liabilities $280,000 Long-term debt Equity Total liabilities and shareholder's equity 2014 2015 $23,000 $26,000 $20,000 $34,000 $123,000 $140,000 -0 Ysom Inc. -1 Operating Cash Flow 2 Earnings before interest and taxes 3 +Deprecition 4- Taxes 5 Operating cash flow 6 -7 Ysom Inc. -8 Net Capital Spending 9 Increase in net fixed assets -0 +Depreciation 1 Net capital spending -2 3 Ysom Inc.. 4 -5 Ending NWC 6 - Beginning NWC 7 Change in NWC -8 Change in NWC 9 Ysom Inc. 50 Cash Flow from Assets 1 Operating cash flow 2- Net capital spending - Change in NWC 3 4 Cash Flow from Assets GS 6 Ysom Inc. 7 Cash Flow to Creditors 8 Interest paid 9- Net new borrowing "O Cash flow to creditors "1 2 Ysom Inc. 3 Cash Flow to Stockholders 4 Dividends paid 5-Net new equity raised 6 Cash flow to stockholders "7 8 FV of new equity at 50% return in 2020 9 Value of Ysom in 2020 0 VC's ownership 1 New shares to the VC =2 3 Price per share VC to pay 4 Pre-money valuation of the firm Post-money valuation of the firm Professor Shin's carried interest :5 :6 =7 8 FV of the first round investment at 50% return 9 Value of Ysom in 2020 0 The first round VC's ownership 1 2014 $0 $55,000 $0 FV of the second round investment of 2 $50,000 at 30% return for 3 years 3 Value of Ysom in 2020 4 The second round VC's ownership 5 16 The first round VC's retention ratio 7 The first round VC's current percent ownership 8 19 New shares to the first round VC 00 Price per share the first round VC to pay 01 Shares outstanding before round 2 02 New shares to the second round VC 03 Shares outstanding after round 2 04 Price per share the second round VC to pay 05 06 Terminal share price 07 IRR for the second round VC 09 IRR for the first round VC LO 2015 $0 $63,000 $0 2015 $40,000 $63,000 2015 $0 $0 2015 $0 $0 $0 2015 $14,000 $17,000 2015 $0 $0 -0 Ysom Inc. -1 Operating Cash Flow 2 Earnings before interest and taxes 3 +Deprecition 4- Taxes 5 Operating cash flow 6 -7 Ysom Inc. -8 Net Capital Spending 9 Increase in net fixed assets -0 +Depreciation 1 Net capital spending -2 3 Ysom Inc.. 4 -5 Ending NWC 6 - Beginning NWC 7 Change in NWC -8 Change in NWC 9 Ysom Inc. 50 Cash Flow from Assets 1 Operating cash flow 2- Net capital spending - Change in NWC 3 4 Cash Flow from Assets GS 6 Ysom Inc. 7 Cash Flow to Creditors 8 Interest paid 9- Net new borrowing "O Cash flow to creditors "1 2 Ysom Inc. 3 Cash Flow to Stockholders 4 Dividends paid 5-Net new equity raised 6 Cash flow to stockholders "7 8 FV of new equity at 50% return in 2020 9 Value of Ysom in 2020 0 VC's ownership 1 New shares to the VC =2 3 Price per share VC to pay 4 Pre-money valuation of the firm Post-money valuation of the firm Professor Shin's carried interest :5 :6 =7 8 FV of the first round investment at 50% return 9 Value of Ysom in 2020 0 The first round VC's ownership 1 2014 $0 $55,000 $0 FV of the second round investment of 2 $50,000 at 30% return for 3 years 3 Value of Ysom in 2020 4 The second round VC's ownership 5 16 The first round VC's retention ratio 7 The first round VC's current percent ownership 8 19 New shares to the first round VC 00 Price per share the first round VC to pay 01 Shares outstanding before round 2 02 New shares to the second round VC 03 Shares outstanding after round 2 04 Price per share the second round VC to pay 05 06 Terminal share price 07 IRR for the second round VC 09 IRR for the first round VC LO 2015 $0 $63,000 $0 2015 $40,000 $63,000 2015 $0 $0 2015 $0 $0 $0 2015 $14,000 $17,000 2015 $0 $0
Expert Answer:
Answer rating: 100% (QA)
Solutions Step 1 1 An income statement for 2014 and 2015 ... View the full answer
Related Book For
Modeling the Dynamics of Life Calculus and Probability for Life Scientists
ISBN: 978-0840064189
3rd edition
Authors: Frederick R. Adler
Posted Date:
Students also viewed these mathematics questions
-
Determine the support reactions at and . Take E = 200 MPa, I = 300(10 6 ) mm 4 , A = 21(10 3 ) mm 2 for each member. - 5 m 300 kN m, 3 9. (2, 4 m 2
-
Use the grouped data formulas to find the indicated mean or standard deviation. The costs per load (in cents) of 26 detergents tested by a consumer organization are shown here. Find the standard...
-
In exercise 1 and 2 the factorization A = PDP-1 to compute Ak, where k represents an arbitrary positive integer. 1. 2. 2 0 2 1-6] [3-2][-3 0] 2 0 2
-
What were the measures taken by Alex to pinpoint the bottleneck in the factory's operations, and subsequently, how did he capitalize on and enhance the bottleneck production? Task: Herbie, the boy...
-
Gil makes out a $900 negotiable promissory note payable to Ben. By special indorsement, Ben transfers the note for value to Jess. By blank indorsement, Jess transfers the note for value to Pam. By...
-
Key comparative figures for Samsung, Apple, and Google follow. In millions Samsung Apple Google Cost of Sales Net sales $ 234,079 $ 147,188 $ 394,328 $ 223,546 $ 282,836 $ 126,203 Complete this...
-
(a) Distinguish between 'non-controllable' and 'controllable' risk. (b) Explain briefly the components of non-controllable and controllable risk.
-
Kruger Corporation produces products that it sells for $36 each. Variable costs per unit are $16, and annual fixed costs are $480,000. Kruger desires to earn a profit of $120,000. Required a. Use the...
-
Particle Q 1 = 3 . 2 mu C has a mass of 6 . 5 mu g , and particle Q 2 = 3 . 5 mu C has a mass of 7 . 6 mu g . The two - charges are initially separated by a distance of 2 . 4 cm . With charge Q 1...
-
Tuckered Outfitters plans to market a custom brand of packaged trail mix. The ingredients for the trail mix will include Raisins, Grain, Chocolate Chips, Peanuts, and Almonds costing, respectively,...
-
Write a paper addressing the topic below. Californias climate change legislation Good or bad for the Environment
-
Select three websites of your choice and compare their design effectiveness. You should describe design features such as navigation, structure and graphics.
-
What characteristics of the Internet make it so conducive to the direct marketing approach?
-
Explain the concept and benefits of the sense and respond approach to customer communications.
-
Think for a moment about a situation where you were part of a group or an organization (work, club, volunteer project, etc.). What were the communication rules and procedures in this context? Was the...
-
Destructive leaders are charismatic, are narcissistic, like power, and often have had some type of traumatic childhood experience. Of these characteristics, are there one or two that you may possess...
-
Between 2006 and 2016, the number of applications for patents, N, grew by about 4.3% per year. That is, N'(t) = 0.043N(t). a) Find the function that satisfies this equation. Assume that t = 0...
-
A glass manufacturer produces hand mirrors. Each mirror is supposed to meet company standards for such things as glass thickness, ability to reflect, size of handle, quality of glass, color of...
-
Total chemical (with rate of change equal to the chemical production rate). For each of the following measurements, give circumstances under which you could measure the following. a. The value but...
-
Compute the following derivatives using the chain rule. G(s) = 8ex2.
-
Find the derivatives of the following polynomial functions. Say where you used the sum, constant product, and power rules. p(x) = 1 + x + x2/2 + x3/6 + x4/24.
-
(a) Is the magnitude of the gravitational force exerted by Earth on a ball greater than, equal to, or smaller than the magnitude of the gravitational force exerted by the ball on Earth? (b) Is the...
-
Two objects 1 and 2, of mass \(m_{1}\) and \(m_{2}\), are released from rest far from Earth, at a location where the magnitude of the acceleration due to gravity is much less than \(g=9.8 \mathrm{~m}...
-
A communications satellite orbits \(1.4 \times 10^{7} \mathrm{~m}\) from Earth's center, at a location where the magnitude of Earth's gravitational field is \(2.0 \mathrm{~N} / \mathrm{kg}\). (a) If...
Study smarter with the SolutionInn App