# 8-3sol - VC Rate of Return 25.0 VC's Share 24.6 c What...

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PROBLEM 8-3 Given Solutio EBITDA 2005 \$4,000,000 = Value given in prob Added EBITDA 1,000,000 = Formula/Calculatio Funding need 5,800,000 = Qualitative analysi VC's required rate 25.0% = Goal Seek or Solve Rate on convertible debt 8.0% = Crystal Ball Input Term 5 years = Crystal Ball Output EBITDA multiple 5 EBITDA growth rate 20.0% Solution Estimated EBITDA EBITDA 2005 \$5,000,000 Estimated EBITDA 2010 \$12,441,600 Multiple 5 Enterprise Value \$62,208,000 Less: Debt \$(5,800,000) Equity Value in 2010 \$56,408,000 VC's Cash Flows Year Cash Flows 0 (5,800,000) 1 464,000 2 464,000 3 464,000 4 464,000 5 14,354,266 Year 5 Conversion Value 13,890,266

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Unformatted text preview: VC Rate of Return 25.0% VC's Share 24.6% c. What share of the firm's equity will the VC require? Estimated EBITDA EBITDA 2005 5,000,000 Estimated EBITDA 2010 18,564,650 Multiple 5 Enterprise Value \$92,823,250 Less: Debt \$(5,800,000) Equity Value in 2010 \$87,023,250 VC's share 15.96% a. What is the value of the combined firm in five years? b. What share of the firm's equity will the VC require? Solved for using Goal Seek such the desired 25% return. on Legend blem on/Analysis required is or Short answer required er cell t that the VC realizes...
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8-3sol - VC Rate of Return 25.0 VC's Share 24.6 c What...

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