Question 3. Based on the following scenario answer Parts A, B, and C. In part A...
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Question 3. Based on the following scenario answer Parts A, B, and C. In part A you will be required to calculate the percent ownership that you will need to give to an outside investor group. In part B you will be required to calculate the total number of shares of stock based on the percent of ownership that you calculated in part A. In part C you will be required to calculate the price per share of the stock that will be derived from your answer in parts A & B. Please note that parts B and C will be graded based on the inputs that you derived from the prior parts. If these inputs were incorrect you will still receive full credit for parts B and C if you show me in the below text box that you used the correct method to solve the question. Scenario: Company A is projected to have equity cash flow of $10,000,000 in year 3. Similar companies have sold for 8X their cash flows giving Company A a projected valuation for $80,000,000 in year 3. Part A. Assuming a 1 round funding scenario, if an investor invests $5,000,000 at the beginning of year 1 (time 0) and requires a 20% return on his/her investment, what is the ownership percentage in the firm that the entrepreneur will want to give to the investor if the firm is sold at the projected amount in year 3? Please input your answer to two decimal places without the % sign and roundup (for example if answer is 10.56% input as .11) Part B. If there are 1,000,000 shares of stock outstanding before the first round of funding, how many shares of stock will be given to the investor in the first round of funding? Please input your answer in the xx,xxx format and round up to the nearest whole number. Part C. What is the price per share of the stock in the first round of funding? Please input your answer in the $xx.xx format and round up to the nearest cent Question 3. Based on the following scenario answer Parts A, B, and C. In part A you will be required to calculate the percent ownership that you will need to give to an outside investor group. In part B you will be required to calculate the total number of shares of stock based on the percent of ownership that you calculated in part A. In part C you will be required to calculate the price per share of the stock that will be derived from your answer in parts A & B. Please note that parts B and C will be graded based on the inputs that you derived from the prior parts. If these inputs were incorrect you will still receive full credit for parts B and C if you show me in the below text box that you used the correct method to solve the question. Scenario: Company A is projected to have equity cash flow of $10,000,000 in year 3. Similar companies have sold for 8X their cash flows giving Company A a projected valuation for $80,000,000 in year 3. Part A. Assuming a 1 round funding scenario, if an investor invests $5,000,000 at the beginning of year 1 (time 0) and requires a 20% return on his/her investment, what is the ownership percentage in the firm that the entrepreneur will want to give to the investor if the firm is sold at the projected amount in year 3? Please input your answer to two decimal places without the % sign and roundup (for example if answer is 10.56% input as .11) Part B. If there are 1,000,000 shares of stock outstanding before the first round of funding, how many shares of stock will be given to the investor in the first round of funding? Please input your answer in the xx,xxx format and round up to the nearest whole number. Part C. What is the price per share of the stock in the first round of funding? Please input your answer in the $xx.xx format and round up to the nearest cent
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Related Book For
Essentials Of Business Statistics
ISBN: 9780078020537
5th Edition
Authors: Bruce Bowerman, Richard Connell, Emily Murphree, Burdeane Or
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