After years and years of non-stop studying. Royce has had enough. What's the point of getting high

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After years and years of non-stop studying. Royce has had enough.

"What's the point of getting high grades if I don't have someone to share my life with?" he says to himself. With this realization, Royce decided to create a dating app called Milk Tea Meets Donut with USD 10,000 in equity capital from his own savings in which he received 100,000 shares of common stock. Milk Tea Meets Donut was an instant hit. He was approached by a venture capitalist who is interested to investing his company and requested for a proposal. Royce remembered his finance class and gathered the following information:

• As with most tech start-ups, his start-up is currently not generating positive free cash flows. However, he realizes that he can use the direct comparison method using a different multiple.

• A direct comparable of his business is Coffee Meets Bagel which is a public company. Coffee Meets Bagel's currently has a market capitalization of USD 5 billion. According to company disclosures, the company has 5 million monthly active users (MAU)

• Royce believes that with an investment of USD 5 million, he will be able to grow his subscriber base to 1,000,000 in 5 years.

• Based on historical data, he expects 10% of his subscriber base to be considered as active users.

• Venture capitalist expects 40% percent annual rate of return for this type of investment

1. What is the Post-Money Valuation of Royce's Venture?

A. 1,959,444.23

B. 1,759,244.32

C. 1,559,044.24

D. 1,659,144.42

E. 1,859,344.32

2. What is the Value of the Company at Year 5?

a. 10,500.000

b. 9,500,000

c. 10,000,000

d. 8,500,000

e. 9,000,000

3. Calculate the Price Multiple that Royce should use to value his Start-up at 5 Years

a. 100

b. 105

c. 95

d. 110

e. 90

4. How many Shares should Royce Issue to Investors in Exchange for the USD 5 Million he is raising?

a. 117,367.79

b. 115,267.97

c. 117.467.79

d. 114,167.97

e. 116,367.79

5. What percentage of the company will Royce have after raising USD 5 million from investors? Please answer in percentage format (e.g. 10.1% should be answered as 10.10).

a. 47.32

b. 46.22

c. 48.42

d. 45.12

e. 44.02