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Valuation Problem Set

# Valuation Problem Set - Tommy(Chung Jin Lee 173C Valuation...

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Tommy (Chung Jin) Lee 173C 3/14/2009 Valuation Problem Set 1. V = \$5M T = 5 years I = \$5M R = 50%, 30% X = 1M P/E = 20 a. \$5 X (1.5)^5 = \$37,968,750 5,000,000 X 20 = 100,000,000 37,968,750 / 100,000,000 = 0.3797 = 37.97% \$5 X (1.3)^5 = \$18,564,650 5,000,000 X 20 = 100,000,000 18,564,650 / 100,000,000 = 0.1856 = 18.56% b. 50% 1,000,000 [0.3797 / (1-0.3797)] = 612,123.17 shares P = 5,000,000 / 612,123.17 = \$8.17 per share 30% 1,000,000 [0.1856 / (1-0.1856)] = 227,897.84 shares P = 5,000,000 / 227,897.84 = \$21.94 per share c. 50% \$12,000,000 X (1.5)^5 = 91,125,000 91,125,000 / 100,000,000 = 0.9112 = 91.12% 1,000,000 [0.9112 / (1-0.9112)] = 10,261,261.26 shares \$5,000,000 / 10,261,261.26 = \$0.49 per share 30% \$12,000,000 X (1.3)^5 = 44,555,160 44,555,160 / 100,000,000 = 0.4456 = 44.56% 1,000,000 [0.4456 / (1-0.4456)] = 803,751.80 shares \$5,000,000 / 803,751.80 = \$6.22 per share

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2. 1,000,000 X (1-15%) = 850,000 50% \$5 X (1.5)^5 = \$37,968,750 5,000,000 X 20 = 100,000,000 37,968,750 / 100,000,000 = 0.3797 = 37.97% 850,000 [0.3797 / (1-0.3797)] = 520,304.69 shares 30% \$5 X (1.3)^5 = \$18,564,650 5,000,000 X 20 = 100,000,000 18,564,650 / 100,000,000 = 0.1856 = 18.56% 850,000 [0.1856 / (1-0.1856)] = 193,713.16 shares 3. a. \$3,000,000 X (1.3)^3 = 6,591,000 6,591,000 / 100,000,000 = 0.0659 = 6.59% 100% - 6.59% = 99.93% 6,591,000 X 99.93% = 6,586,386.30 6,586,386.30 X (1.5)^2 = 14,819,369.18 14,819,369.18 / 100,000,000 = .1482 = 14.82% 850,000 [0.1482 / (1-0.1482)] = 147,886.83 shares \$5,000,000 / 147,886.83 = \$33.81 per share b. \$3,000,000 X (1.3)^3 = 6,591,000 6,591,000 / 100,000,000 = 0.0659 = 6.59% 850,000 [0.0659 / (1-0.0659)] = 59,966.81 shares \$5,000,000 / 59,966.81 = \$50.03 per share 4. Roger’s brother, Henry’s new venture. a. Henry has the right idea that no one would invest \$1 million with out a prototype. Henry has two options, either try to get debt financing such as personal line of credit or find an angel investors, such as friends or family. He has the idea but he is not even sure that the idea will work. He seems to have an idea that, if he starts
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Valuation Problem Set - Tommy(Chung Jin Lee 173C Valuation...

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