VC Math HW
docx
keyboard_arrow_up
School
Columbia University *
*We aren’t endorsed by this school
Course
6015
Subject
Finance
Date
Feb 20, 2024
Type
docx
Pages
2
Uploaded by ChefKangaroo15014
1) Startup X raises 2 rounds of financing. At the end of the series A round, what percent of the company do the founder, seed investors, and series A investors own and what share price did the seed and series A investor pay? Assume no pro-rata rights or none exercised and assume founders are initially issued 5M shares.
Priced equity seed round = $1.5M raise, $5M pre-money valuation
Priced equity series A = $3M raise, $8M pre-money valuation
2) Startup Y raises 2 rounds of financing. At the end of the series A round, what percent of the company do the founder, seed investors, and series A investors own and what share price did the seed and series A investor pay?
Assume no pro-rata rights or none exercised and assume founders are initially issued 5M shares. Assume no interest rate.
1.
Seed round = $1M raise, $5M cap, 25% discount
2.
Series A = $1M raise, $6M pre-money valuation
3) Startup Z has an acquisition offer in front of them for $30M. They raised a seed round which you invested in (you put in $250K). They also raised an A and you did not invest any additional money. They are trying to decide between accepting the acquisition offer today or raising a series B which they think will increase their acquisition price to $65M. As a seed investor, which option do you prefer and why?
Seed round = $1M raise, $4M pre-money valuation
Series A = $5M raise, $15M pre-money valuation
Proposed Series B = $10M raise, $25M pre-money valuation
4) There is a $50M fund. Ignore management fees. At the end of 10 years, they are able to return $150M (meaning $100M on top of the original $50M).
How much money does the VC retain in carry and how much is distributed to the LPs?
5) There is a VC fund that made 50 investments of $1M each.
In Jan 2009 and 2010, they made 10 investments each year - all of these folded with $0 liquidation value
In Jan 2011, they made 10 investments - all of these returned the investor's money in Jan 2014
In Jan 2012, they made 10 investments - all of these doubled the investor's money in Jan 2015
In Jan 2013, they made 10 investments - 5 of these tripled the investor's money (meaning returned $3M) and exited in Jan 2017. 3
of the investments made 6x (meaning returned $6M) and exited in
Jan 2018. The last 2 investments made 20x and exited in Jan 2018.
What is the gross IRR of this fund (meaning, don't worry about fees/carry)?
6) For this question, use only using public sources of data and make reasonable assumptions (I shared data sources and guidelines throughout the class). Assume an angel invested $25K into Alice (aliceplatform.com, hotel software startup). Assume they did not exercise their pro-rata rights. Assume all rounds were priced rounds. After the series B, what would the angel's investment be worth?
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
- Access to all documents
- Unlimited textbook solutions
- 24/7 expert homework help
Related Questions
Please help me with this question answer general Accounting
arrow_forward
Suppose that you just short sold 100 shares of Quiet Minds stock for $86.00 per share.
Required:
a. If the initial margin requirement is 60%, how much equity must you invest?
arrow_forward
Is this correct?
arrow_forward
Assume you purchased 500 shares of XYZ common stock on margin at $29 per share from your
broker.
A. Find the following (note: fill in the blanks with values rounded to the nearest cent, no dollar signs
"$", and commas "". Example: $1,234.567 >>> write as 1234.57)
If the initial margin is 57%, the amount you borrowed from the broker is $
and your equity is $
B. What is the new margin if the price of share falls to $31?
(note: fill in the blank with rounded % as follows: example 34.567% >>> write as 34.57%)
arrow_forward
Answer the following questions in a separate document. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your assignment using the assignment link.
Bad Boys, Inc. is evaluating its cost of capital. Under consultation, Bad Boys, Inc. expects to issue new debt at par with a coupon rate of 8% and to issue new preferred stock with a $2.50 per share dividend at $25 a share. The common stock of Bad Boys, Inc. is currently selling for $20.00 a share. Bad Boys, Inc. expects to pay a dividend of $1.50 per share next year. An equity analyst foresees a growth in dividends at a rate of 5% per year. The Bad Boys, Inc. marginal tax rate is 35%. If Bad Boys, Inc. raises capital using 45% debt, 5% preferred stock, and 50% common stock, what is Bad Boys, Inc.’s cost of capital?
If Bad Boys, Inc. raises capital using 30% debt, 5% preferred stock, and 65% common stock, what is Bad Boys, Inc.’s cost of capital?
arrow_forward
Hii expert please given correct answer general accounting question
arrow_forward
You are an investment adviser. One of your clients approaches you for your advice on investing inequity shares of Theta Company. You have collected the following data:Earnings per share last year $6.00Payout ratio 0.40Return on equity 0.30Cost of equity capital 0.20The company plans to increase the payout ratio to 60% from year 5.Required:i) Estimate the price of an equity share of this company using an appropriate dividenddiscount model and advise your client whether they should buy a share of the company.ii) Your client is keen to know whether there are any growth opportunities from theirinvestment. Explain to your client the meaning of this concept using appropriatecalculations.iii) If there are positive or negative growth opportunities, explain the reason for suchopportunities.
arrow_forward
Suppose you purchase one share of
the stock of Volatile Engineering
Corporation at the beginning of year 1
for $36. At the end of year 1, you
receive a $2 dividend and buy one
more share for $30. At the end of year
2, you receive total dividends of $4
(i.e., $2 for each share) and sell the
shares for $36.45 each. The dollar-
weighted return on your investment
is
Answers:
А. -1.75%.
B. 8.00%.
C. 4.08%.
D. 8.53%.
Е. 12.35%.
arrow_forward
Need help with a and b as well as the last question on whether the internal rate of return is the same as discount rate
arrow_forward
NAME
Herbalife Nutrition
Herc Holdings
Heritage Insurance Holdings HRTG
Hersha Hospitality Trust CIA
HT
Hershey
HSY
HTZ
SYMBOL CLOSE NET CHG
57.94 -1.39
26.86 -0.71
14.57
-0.38
Hertz Global Holdings
Hess Corp.
Hess Midstream Partners
HLF
HRI
HES
HESM
Hewlett Packard Enterprise HPE
16.59 -0.16
106.24
0.80
-0.77
13.27
42.39 0.15
17.87 0.25
13.18 -0.28
VOLUME
DIV YIELD P/E
1,149,773 60.41
389,826 72.99
81,929 19.15
732,879 24.16
1,145,889 114.63
52 WK 52 WK
HIGH LOW
34.16 1.20 2.07 47.75 -1.71
24.16
3.10 3.35
12.85 0.24 1.65 22.01 -1.02
2,965,201 25.14
16.50 1.12 6.75 ...dd -5.42
89.10 2.89 2.72 22.00 -0.88
13.01
2.24 -2.78
35.59 1.00 2.36
...dd
47,899 24.51 16.17 1.43 8.00 14.60
12.09 0.45 3.41 11.46
5,969,511 74.81
11,756,695 19.48
****
****
YTD
%CHG
Figure 2.8 Listing of stocks traded on the New York Stock Exchange
Source: WSJ Online, January 4, 2019.
4.67
5.24
-0.23
arrow_forward
If iOS Corp. issues an additional $8 million of debt and uses this money to retire common stock, what will be the expected return on the
stock? Assume that the change in capital structure does not affect the risk of the debt, and recall that the WACC under the initial capital
structure is 13.85%. Enter your answer as a percentage. Do not include the percentage sign in your answer. Enter your answer
rounded to 2 DECIMAL PLACES.
TE= Number
Click "Verify" to proceed to the next part of the question.
arrow_forward
Choose the right letter
1. ABC Company decided to enter into a large venture. Thus, there is a need for additional funds. The financial manager intends to issue preferred stock with a perpetual annual dividend of Php 5 per share and a par value of Php 30. If the required return on this stock is currently 20%, what is the stock’s estimated (market) value?
A. Php 150
B. Php 100
C. Php 50
D. Php 25
2. ABC Power Inc. is expected to pay cash dividends of Php 1.00 per share at the end of the year (D1 = Php 1.00). Each share sells for Php 20 and the required rate of return is 11%. The dividend is expected to grow at a constant rate forever. What is the growth rate for this stock? *
A. 5%
B. 6%
C. 7%
D. 8%
arrow_forward
Answer ASAP
arrow_forward
Need help with this question. Please work out the solution step by step and explanation
arrow_forward
just subpart (c) please thank you
arrow_forward
Please don't use Ai solution
arrow_forward
Please help
arrow_forward
You are working for Medical Equipment Exports Group. Your corporation is going to pay an annual dividend of $5 per share and an extra dividend of $1.5 per share in 4 weeks. The company’s stock is currently listed and actively traded on the ASX.
Required:
The standard process of settlement in ASX is T+2. If tomorrow is the record date for dividend payment for Medical Equipment Exports Group, when is the ex-dividend date for trading of this share on the ASX? Calculate the ex-dividend price if the corporation’s closing price the day before ex-dividend date is $143.5, assuming the dividend flat tax rate is 17%.
Medical Equipment Exports Group has an extra cash of A$645,000. The AUD/USD exchange rate in New York is 0.74659. The USD/AUD rate in Sydney is 1.38127. Is there any arbitrage profit possible? Set up an arbitrage scheme with the extra cash. What is the potential gain in the AUD dollar, disregarding bid-ask spread?
Medical Equipment Exports Group considers which method of dividend…
arrow_forward
Wellington Jumbo Crab's stock currently sells for $70 per share with 1 million shares outstanding. The company wants to raise new equity using rights offer. To
purchase a new share, a stockholder must remit $30 and four rights. How much fund would the company raise with the offering?
$1 million
$7.5 million
$0.25 million
$1.25 million
arrow_forward
Angel Company would like to
undertake a policy of paying
out 45% of its income. Its
latest net income was
P1,250,000, and it had
225,000 shares outstanding.
What dividend per share
should Angel declare? *
P2.50
P2.14
P2.38
O P2.26
O P2.63
arrow_forward
SEE MORE QUESTIONS
Recommended textbooks for you

EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
Related Questions
- Assume you purchased 500 shares of XYZ common stock on margin at $29 per share from your broker. A. Find the following (note: fill in the blanks with values rounded to the nearest cent, no dollar signs "$", and commas "". Example: $1,234.567 >>> write as 1234.57) If the initial margin is 57%, the amount you borrowed from the broker is $ and your equity is $ B. What is the new margin if the price of share falls to $31? (note: fill in the blank with rounded % as follows: example 34.567% >>> write as 34.57%)arrow_forwardAnswer the following questions in a separate document. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your assignment using the assignment link. Bad Boys, Inc. is evaluating its cost of capital. Under consultation, Bad Boys, Inc. expects to issue new debt at par with a coupon rate of 8% and to issue new preferred stock with a $2.50 per share dividend at $25 a share. The common stock of Bad Boys, Inc. is currently selling for $20.00 a share. Bad Boys, Inc. expects to pay a dividend of $1.50 per share next year. An equity analyst foresees a growth in dividends at a rate of 5% per year. The Bad Boys, Inc. marginal tax rate is 35%. If Bad Boys, Inc. raises capital using 45% debt, 5% preferred stock, and 50% common stock, what is Bad Boys, Inc.’s cost of capital? If Bad Boys, Inc. raises capital using 30% debt, 5% preferred stock, and 65% common stock, what is Bad Boys, Inc.’s cost of capital?arrow_forwardHii expert please given correct answer general accounting questionarrow_forward
- You are an investment adviser. One of your clients approaches you for your advice on investing inequity shares of Theta Company. You have collected the following data:Earnings per share last year $6.00Payout ratio 0.40Return on equity 0.30Cost of equity capital 0.20The company plans to increase the payout ratio to 60% from year 5.Required:i) Estimate the price of an equity share of this company using an appropriate dividenddiscount model and advise your client whether they should buy a share of the company.ii) Your client is keen to know whether there are any growth opportunities from theirinvestment. Explain to your client the meaning of this concept using appropriatecalculations.iii) If there are positive or negative growth opportunities, explain the reason for suchopportunities.arrow_forwardSuppose you purchase one share of the stock of Volatile Engineering Corporation at the beginning of year 1 for $36. At the end of year 1, you receive a $2 dividend and buy one more share for $30. At the end of year 2, you receive total dividends of $4 (i.e., $2 for each share) and sell the shares for $36.45 each. The dollar- weighted return on your investment is Answers: А. -1.75%. B. 8.00%. C. 4.08%. D. 8.53%. Е. 12.35%.arrow_forwardNeed help with a and b as well as the last question on whether the internal rate of return is the same as discount ratearrow_forward
- NAME Herbalife Nutrition Herc Holdings Heritage Insurance Holdings HRTG Hersha Hospitality Trust CIA HT Hershey HSY HTZ SYMBOL CLOSE NET CHG 57.94 -1.39 26.86 -0.71 14.57 -0.38 Hertz Global Holdings Hess Corp. Hess Midstream Partners HLF HRI HES HESM Hewlett Packard Enterprise HPE 16.59 -0.16 106.24 0.80 -0.77 13.27 42.39 0.15 17.87 0.25 13.18 -0.28 VOLUME DIV YIELD P/E 1,149,773 60.41 389,826 72.99 81,929 19.15 732,879 24.16 1,145,889 114.63 52 WK 52 WK HIGH LOW 34.16 1.20 2.07 47.75 -1.71 24.16 3.10 3.35 12.85 0.24 1.65 22.01 -1.02 2,965,201 25.14 16.50 1.12 6.75 ...dd -5.42 89.10 2.89 2.72 22.00 -0.88 13.01 2.24 -2.78 35.59 1.00 2.36 ...dd 47,899 24.51 16.17 1.43 8.00 14.60 12.09 0.45 3.41 11.46 5,969,511 74.81 11,756,695 19.48 **** **** YTD %CHG Figure 2.8 Listing of stocks traded on the New York Stock Exchange Source: WSJ Online, January 4, 2019. 4.67 5.24 -0.23arrow_forwardIf iOS Corp. issues an additional $8 million of debt and uses this money to retire common stock, what will be the expected return on the stock? Assume that the change in capital structure does not affect the risk of the debt, and recall that the WACC under the initial capital structure is 13.85%. Enter your answer as a percentage. Do not include the percentage sign in your answer. Enter your answer rounded to 2 DECIMAL PLACES. TE= Number Click "Verify" to proceed to the next part of the question.arrow_forwardChoose the right letter 1. ABC Company decided to enter into a large venture. Thus, there is a need for additional funds. The financial manager intends to issue preferred stock with a perpetual annual dividend of Php 5 per share and a par value of Php 30. If the required return on this stock is currently 20%, what is the stock’s estimated (market) value? A. Php 150 B. Php 100 C. Php 50 D. Php 25 2. ABC Power Inc. is expected to pay cash dividends of Php 1.00 per share at the end of the year (D1 = Php 1.00). Each share sells for Php 20 and the required rate of return is 11%. The dividend is expected to grow at a constant rate forever. What is the growth rate for this stock? * A. 5% B. 6% C. 7% D. 8%arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT

EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT