Question: You have a groundbreaking idea to develop a new technology that would change the world. You have approached a venture capitalist, asking for a $100
You have a groundbreaking idea to develop a new technology that would change the world. You have approached a venture capitalist, asking for a $100 million investment in your company. You believe that the initial $100 million investment to generate $40 million annual free cash flows indefinitely. The discount rate is 15%. If the venture capitalist agrees to give you the $100 million in exchange for a 40% ownership share in the company. What is the company's "after-the-money" valuation (valuation made by the VC in exchange for 40% ownership)?
| $200mil. | ||
| $250mil. | ||
| $266.67mil. | ||
| $222.22mil. | ||
| $666.67mil. |
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