A potential investor is willing to provide S500, 000 in first - round financing with the expectation of a 50% annual compound rate of return over the next five years. Founders currently hold 1,000, 000 million shares of stock. The venture is expected to produce $500,000 in net income in year 5. A similar firm with annual net income of $1,000,000 sold shares to the public for $10,000,000. What is the post- money valuation? a. $499, 954 b. $408, 377 c. $658,436 d. $249,977 (Please provide me with the equation for the BA2 Plus calculator method.)

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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A potential investor is willing to provide S500, 000 in first - round financing with the expectation of a 50% annual compound rate of return over the next five years. Founders currently hold 1,000, 000 million shares of stock. The venture is expected to produce $500,000 in net income in year 5. A similar firm with annual net income of $1,000,000 sold shares to the public for $10,000,000. What is the post- money valuation?

a. $499, 954

b. $408, 377

c. $658,436

d. $249,977

(Please provide me with the equation for the BA2 Plus calculator method.)

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