Mark, the founder and CEO of Marks Famous Falafel, started the company as a partnership with a
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65% of the shares in the company. Over the course of three years, Mark has approved a payout policy that would pay a total amount of $5000 as a dividend each year to the corporation shareholders. Today, the founder was approached by a Venture Capital Fund, who offers $27000 for a 13.5% share in the company. What is the annualized total return of the founder’s initial investment based on this new valuation? Note: for the calculation of the return to Mark’s portfolio, it does not matter whether he sells or not his shares, or if the Venture capital fund’s offer is accepted. What matters is that Mark is learning the new value of his holdings in the company.
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Behavioral Corporate Finance Concepts And Cases For Teaching Behavioral Finance
ISBN: 9781259277207
2nd Edition
Authors: Hersh Shefrin
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