Valuation Problem Set

Valuation Problem Set - Venture Capital Method Valuation...

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 Venture Capital Method   Valuation Problem Set  1)     V = $100 million,  t = 5 years,  I = $5 million,  r = 50% and 30%,  x = 1 million  a.  NPV of terminal value = V/(1+r)^t = 100million/ 1.5^5 =       Pre-money = 13,168,724.28 - 5,000,000     =       Share of company required for 50% return = 5,000,000/ 13,168,724.28  = 38%      NPV of terminal value = V/(1+r)^t = 100million/ 1.3^5 =      Pre-money = 26,932,907.43 - 5,000,000 =      Share of company required for 30% return = 5,000,000/ 26,932,907.43  =  19%  b.   Required shares for a 50% return   612,903  y=1000000*(.38/(1-.38))         Required shares for 30% return  234,568  y=1000000*(.19/(1-.19))        Price per share for 50% return  $8.16  P=5000000/612903       Price per share for 30% return P=5000000/234568  $21.32  pre-money = 13,168,724-12m = 1,168,724
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This note was uploaded on 09/08/2010 for the course BUS 173C at San Jose State.

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Valuation Problem Set - Venture Capital Method Valuation...

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