A potential investor, Matt, is seeking to invest $1,000,000 in a venture, Bytedance which currently has...

 

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A potential investor, Matt, is seeking to invest $1,000,000 in a venture, Bytedance which currently has 2,000,000 shares held by its founder Zhang Yiming, and is targeting a 50% return five years from known that a similar venture recently produced $2,000,000 in income and sold shares to the public now. The venture is expected to produce a million dollars in income per year at year 5. It is for $20,000,000. 7.1. (4 marks) What is the percent ownership of Bytedance venture that must be sold in order to provide the venture investor's target return? 7.2. (4 marks) What is the number of shares that must be issued to the new investor in order for the investor to earn his target return? 7.3. (4 marks) What is the issue price per share? After 3 years, the Bytedance is expected to produce $20,000,000 in income and will list in two years. Bytedance wants to get $20,000,000 of new investment from Neil with its required return rate of 25%. The market price of Bytedance business is 10 times of the price when Matt invested. Zhang Yiming and Matt agree to dilute their shares with the same ratio for Neil in which the ratio of ownership shares between Zhang Yiming and Matt is not changed. 7.4. (5 marks) What is the percent ownership of Bytedance that must be sold to Neil? 7.5. (8 marks) Following the share price for the investment of Neil, what is the return ratio that Matt evaluates his investment then? A potential investor, Matt, is seeking to invest $1,000,000 in a venture, Bytedance which currently has 2,000,000 shares held by its founder Zhang Yiming, and is targeting a 50% return five years from known that a similar venture recently produced $2,000,000 in income and sold shares to the public now. The venture is expected to produce a million dollars in income per year at year 5. It is for $20,000,000. 7.1. (4 marks) What is the percent ownership of Bytedance venture that must be sold in order to provide the venture investor's target return? 7.2. (4 marks) What is the number of shares that must be issued to the new investor in order for the investor to earn his target return? 7.3. (4 marks) What is the issue price per share? After 3 years, the Bytedance is expected to produce $20,000,000 in income and will list in two years. Bytedance wants to get $20,000,000 of new investment from Neil with its required return rate of 25%. The market price of Bytedance business is 10 times of the price when Matt invested. Zhang Yiming and Matt agree to dilute their shares with the same ratio for Neil in which the ratio of ownership shares between Zhang Yiming and Matt is not changed. 7.4. (5 marks) What is the percent ownership of Bytedance that must be sold to Neil? 7.5. (8 marks) Following the share price for the investment of Neil, what is the return ratio that Matt evaluates his investment then?

Answer rating: 100% (QA)

SOLUTION 71 To achieve a 50 return on the 1000000 investment in 5 years the investment must grow to 1500000 Assuming that the value of Bytedance is pr... View the full answer