Question: Using the following information, please answer the questions about Sure lock Homes, a start-up company. In your analysis, assume the valuation date is the end

Using the following information, please answer the questions about Sure lock Homes, a start-up company. In your analysis, assume the valuation date is the end of year 6, projected earnings in year 6 will be$12 million, and an appropriate price-to-earnings ratio for valuing these earnings is 20 times.

In addition, the company wants to reserve 15 percent of the shares outstanding at time 6 for employee bonuses and options.
a. What percentage ownership at time 0 should round 1 investors demand for their $6 million investment?
b. If Sure lock presently has 1 million shares outstanding, how many shares should round 1 investors demand at time 0?
c. What is the implied price per share of Sure lock stock at time 0?
d. What is Sure lock€™s pre-money value at time 0? What is its post-money value?

Amount in millions $ 6 12 Required Return 80% 40% 30% Financing Round Year

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