Question: Measuring venture capital fund performance: Net Present Value Exercise 2 (Homework) - You consider to invest in a venture capital fund. In order to make

Measuring venture capital fund performance: Net Present Value Exercise 2 (Homework)

Measuring venture capital fund performance: Net Present Value Exercise 2 (Homework) - You consider to invest in a venture capital fund. In order to make sure that the investment is rational, you calculate the NPV of this fund. The conditional failure rates of the fund are 20% (year 1), 12% (year 2), 15% (year 3), 17% (year 4) and 14% (year 5). The investment sum is $5 million, the estimated payoff after 5 years is $20 million and your required return is 22%. Calculate the net present value of this investment and discuss the result

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