Chapter 13 Solutions - Problem 13-1a Income Statement...

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Unformatted text preview: Problem 13-1a Income Statement Information Year 1 2 3 4 Sales $10,000,000 Cash Flow Information External Funds Required to Support Operations $1,000,000 $1,500,000 $2,000,000 $3,000,000 $0 Equity Capital Raised $6,834,143 Beginning Cash Balance $6,834,143 $6,125,850 $4,857,143 $3,000,000 ($0) Uses of Cash $1,000,000 $1,500,000 $2,000,000 $3,000,000 $0 Cash Invested in Marketable Securities $5,834,143 $4,625,850 $2,857,143 ($0) ($0) Return on Invested Cash $291,707 $231,293 $142,857 ($0) ($0) Ending Cash Balance $6,125,850 $4,857,143 $3,000,000 ($0) ($0) Investor Valuation and Ownership Allocation Investor Hurdle Rate 75.00% 60.00% 45.00% 30.00% 30.00% Continuing Value Earnings Multiplier 6 Continuing Value of Venture $60,000,000 Required Future Value of Investment $64,096,786 Ownership Share Required 106.83% Valuation Template Single-Stage Investment - Venture Capital Method Problem 13-1b Income Statement Information Year 1 2 3 4 Sales $10,000,000 Cash Flow Information External Funds Required to Support Operations $1,000,000 $1,500,000 $2,000,000 $3,000,000 $0 Equity Capital Raised $1,000,000 $1,500,000 $2,000,000 $3,000,000 Beginning Cash Balance $1,000,000 $1,500,000 $2,000,000 $3,000,000 $0 Uses of Cash $1,000,000 $1,500,000 $2,000,000 $3,000,000 $0 Cash Invested in Marketable Securities $0 $0 $0 $0 $0 Return on Invested Cash $0 $0 $0 $0 $0 Ending Cash Balance $0 $0 $0 $0 $0 Investor Valuation and Ownership Allocation Investor Hurdle Rate 75.00% 60.00% 45.00% 30.00% 30.00% Continuing Value Earnings Multiplier 6 Continuing Value of Venture $60,000,000 Investor's Required Future Value and Equity Share Required Beginning Share Required Ending Share Value Fourth Stage 6.50% 6.50% $3,900,000 Third Stage 7.50% 7.01% $4,205,000 Second Stage 11.84% 10.24% $6,144,000 First Stage 20.50% 15.63% $9,378,906 Ownership Required 39.38% $23,627,906 Valuation Template Multi-Stage Investment - Venture Capital Method Problem 13-1c Spreadsheet is modified to evaluate the effects of changing expectations about value. Income Statement Information Year 1 2 3 4 Sales $10,000,000 Cash Flow Information External Funds Required to Support Operations $1,000,000 $1,500,000 $2,000,000 $3,000,000 $0 Equity Capital Raised $1,000,000 $1,500,000 $2,000,000 $3,000,000 Beginning Cash Balance $1,000,000 $1,500,000 $2,000,000 $3,000,000 $0 Uses of Cash $1,000,000 $1,500,000 $2,000,000 $3,000,000 $0 Cash Invested in Marketable Securities $0 $0 $0 $0 $0 Return on Invested Cash $0 $0 $0 $0 $0 Ending Cash Balance $0 $0 $0 $0 $0 Investor Valuation and Ownership Allocation Investor Hurdle Rate 75.00% 60.00% 45.00% 30.00% 30.00% Continuing Value Earnings Multiplier 6 6 6 6 Continuing Value Est. at time of investment $60,000,000 $54,000,000 $45,000,000 $36,000,000 Investor's Required Future Value and Equity Share Required Beginning Share Required Ending Share Value Ending value of claim Fourth Stage 10.83% $3,900,000 $3,900,000 Third Stage 9.34% $4,205,000 $3,364,000 Second Stage 11.38% $6,144,000...
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This note was uploaded on 02/19/2012 for the course FIN 124 taught by Professor Jackson during the Spring '05 term at University of Texas at Dallas, Richardson.

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Chapter 13 Solutions - Problem 13-1a Income Statement...

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