a. What is the total after-the-money valuation of the firm? b. What value is the venture capitalist placing on each share? Note: Round your answer to the nearest whole number.
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- Ethelbert.com is a young software company owned by two entrepreneurs. It currently needs to raise $700,000 to support its expansion plans. A venture capitalist is prepared to provide the cash in return for a 40% holding in the company. Under the plans for the investment, the VC will hold 14,000 shares in the company and the two entrepreneurs will have combined holdings of 21,000 shares. a. What is the total after-the-money valuation of the firm? (Enter your answer in dollars not millions.) Valuation of the firm b. What value is the venture capitalist placing on each share? Value of each shareThe startup management is looking to raise venture capital. The pre-money valuation is $10,000,000 with two co-founders holding 40% of the shares each and two investors holding 10% respectively. Now, the platform receives a venture capital injection of $10,000,000. Answer the following questions: i. What is the post-money valuation in $? ii. How much equity does each founder hold in % and $ after the capital injection? iii. How much equity does the venture capital firm hold in % and $ after the capital injection?Luma, a startup company, provides a platform for people to host virtual classes, record live shows, educate, and find their communities via Zoom. Suppose a founder owns 100% of the startup and currently has 0.5 million shares. The founder plans to raise $3 million from Venick (a venture capital firm investing in technology and healthcare companies) in Series A financing with the pre-money valuation of $10 million. An option pool of 15% is reserved for future employees. Given the information, find the Price/shares paid by Venrock following capitalization table AFTER series A. $2.7 $7.2 $12.5 O $16.1
- An entrepreneur first started his business with $100,000. Later, a venture capitalist (VC) agrees to invest $300,000 to sustain the growth. In return, this VC will take up a 50% equity position in the firm. How much is this business worth now? (Show your calculations)A financial services company is considering a new investment in a new technology platform for investment management. The company has identified a fintech startup that is seeking funding at a valuation of $5 million. The company expects to receive a dividend of $200,000 per year over a five year term and sells it equity stake at a valuation of $10 million. What is the expected return on investment if the financial services company invests $2 million in the fintech startupMonica is the CFO of Cooking for Friends (CFF) and uses the pecking order hypothesis philosophy when she raises capital for company projects. Currently, she can borrow up to $ 400000 from her bank at a rate of 7.5%, float a bond for $700000 at a rate of 10%, or issue additional stock for $1300000 at a cost of 18%. What is the WACC for CFF if Monica chooses to invest a. $800000 in new projects? b. $2200000 in new projects? c. $2400000 in new projects?
- Finding the WACC. Monica is the CFO of Cooking for Friends (CFF) and uses the pecking order hypothesis philosophy when she raises capital for company projects. Currently, she can borrow up to $450,000 from her bank at a rate of 7.75%, float a bond for $800,000 at a rate of 10%, or issue additional stock for $1,500,000 at a cost of 15%. What is the WACC for CFF if Monica chooses to invest A. $900,000 in new projects? B. $200,000 in new projects? C. $2,750,000 in new projects?You are an angel investor, and 4 entrepreneurs have approached you to build some innovative folding tables, and the proposals are as follows. Project A, an investment of 566967 and annual cash flows respectively of 415527, 209635, 199906 and 298311. Project B, an investment of 439043 and annual cash flows respectively of 417004, 150449, 117975 and 384645. Project C, an investment of 628001 and annual cash flows respectively of 140108, 507720, 225467 and 147962. Project D, an investment of 450834 and annual cash flows respectively of 102735, 111878, 508753 and 154070. If the rate expected by you is 21.33% per year of compound interest. Which project is more profitable according to the NPV (Net Present Value)?Question 1 options: d c a b"You founded your firm with a contribution of $500,000, receiving 2,000,000 shares of stock. Since then, you sold 6,000,000 stocks to Angel Investors. Now you are considering raising more capital from a Venture Capitalist. They will invest $7,000,000 and would receive 5,000,000 newly issued shares. If this is the VC's first investment in the company, what percentage of the firm will they end up owning? Note: Express your answers in strictly numerical terms. For example, if the answer is 5 percent, enter 0.05 as an answer."
- A startup company has developed a new mobile app that has the potential to disrupt the market. The company is seeking funding to launch and market the app. The company is considering two financing options: equity financing with a venture capital firm that offers a valuation of $10 million and debt financing with a bank at an interest rate of 10% over a five-year term. What is the percentage of ownership the venture capital firm will have if it invests $5 million at a valuation of $10 million?A venture capital fund is considering investing in a startup that is seeking to raise $1,500,000 in equity capital. The venture had previously raised $250,000 from angel investors and the founder had invested $50,000 of her savings in her venture. At the time this investment was under consideration, the company was projecting to be profitable three years from now. Net income in year three is projected to be $225,000. Because of projected losses in year one and two, cumulative retained earnings entering year three are projected to be negative $120,000. The venture capital firm will not invest unless the projected return on equity in year three is at least 30% If you were employed by the venture capital fund, based on this information alone, would you recommend that the $1,500,000 investment be made? Yes, the projected return on equity in year three is greater than 30% No, the projected return on equity in year three is less than 30%You are an angel investor, and 4 entrepreneurs have approached you to build some innovative folding tables, and the proposals are as follows. Project A, an investment of 601620 and annual cash flows respectively of 162629, 102390, 194996 and 540881. Project B, an investment of 262256 and annual cash flows respectively of 241160, 25992, 279502 and 270678. Project C, an investment of 514012 and annual cash flows respectively of 181039, 554818, 386520 and 83787. Project D, an investment of 630067 and annual cash flows respectively of 311645, 36977, 442569 and 223467. If the rate expected by you is 4.33% per year of compound interest. Which project is more profitable according to the NPV (Net Present Value)? Question 2 options: b c a d