An entrepreneur seeks $11 million from a VC fund. The entrepreneur and fund managers agree that the entrepreneur's venture is currently worth $25 million and that the company will likely be ready to go public in five years. At that time, the company is expected to have a net income of $7.5 million, and comparable firms are expected to be selling at a price/earnings ratio of 30. Given the company's stage of development, the venture capital fund managers require a 45% compound annual return on their investment. What fraction of the firm will the fund receive in exchange for its $11 million investment? Round your answer to two decimal places.
Q: The following amounts have been taken from the recent financial statements for Merema Industries:…
A: To calculate the operating cash flow to current liabilities ratio, use this formula: Operating Cash…
Q: Solve this one
A: 1. First, we need to calculate the total assets: Cash: $1,206 Inventory: $14,290 Accounts…
Q: General accounting
A: Step 1: Analyzing Target Corporation's Truck Sale and Boeing's Net Income A)Target Corporation's…
Q: 5 4 On January 1, 2024, Nath-Langstrom Services, Incorporated, a computer software training firm,…
A: Step 1:1) Journal entries recorded by Nath-Langstrom Services for the first year of the…
Q: 14:45 1.40 45% KBla As of December 31, 2022, ToMoNo Partnership showed capital balances of: To…
A: Approach to solving the question:Step 1:We sum up all the capital balances of the partners. Note:…
Q: General accounting
A: Step 1: Procter & Gamble has acquired whole of the company, so now it controls the company…
Q: Coronado Welding rebuilds spot welders for manufacturers. The following budgeted cost data for 2020…
A: Step 1: Calculate the Rate Charged Per Hour of Labor Identify Total Labor Costs: Technicians' wages…
Q: None
A: Step 1: Calculation of cash flow from operations.Net cash change = ending balance - beginning…
Q: provide required answer please
A: Step 1: Definition of Free Cash Flow:Every entity needs money for operational purposes or…
Q: not use ai please How to solve Trey Monson starts a merchandising business on Dec. 1 and enters…
A: In the FIFO method:The first items purchased (oldest inventory) are the first to be sold.This means…
Q: Prepare the journal entries for Sheridan in 2025 and 2026 related to this service contract. (List…
A: Detailed explanation: Let's break down the journal entries and the rationale behind each step in…
Q: Need help with this question
A: Step 1: Introduction to the Non-interest Bearing NoteNon-interest bearing in the note does not pay…
Q: 9 A product sells for $205 per unit, and its variable costs per unit are $134. Total fixed costs are…
A: Step 1:Sales required for desired profit can be calculated by using following formula = ( Fixed…
Q: General accounting
A: Step 1: GivenPrinciple, P = $2500Interest rate, r = 4% = 0.04 Step 2:The amount of money after (t)…
Q: Give correct answer
A: Step 1: Introduction to variable costingIn variable costingUnder variable costing, only direct…
Q: Question 2 Necks Auto are retailers who purchase and sell vehicle parts & accessories, including…
A: Explanation of the Perpetual Inventory System and FIFOThe perpetual inventory system is a method of…
Q: answer must be in table format or i will give down vote
A: Step 1: Calculate the equivalent units for materials.Since all materials are added at the beginning…
Q: bok Problem 8-29 (Algo) Completing a Master Budget [LO8-2, LO8-4, LO8-7, LO8-8, LO8-9, LO8-10] The…
A:
Q: None
A: Step 1: Definition of Repurchase of Shares:The repurchase of own shares is done when the company…
Q: Don't use AI
A: Key Risks ABC Corporation Should Consider with JIT:Supply Chain Disruptions: Since JIT minimizes…
Q: Addleman Corporation has an activity-based costing system with three activity cost…
A: The first step in activity-based costing is to identify the overhead costs. In this case, the…
Q: None
A:
Q: Required information [The following information applies to the questions displayed below.]…
A: The problem involves calculating the cost of work in process using the weighted-average method for a…
Q: Can you please solve this question?
A: We have given, Principal amount (P) = $70,000Annual interest rate = 9% = 0.09Number of years =…
Q: Financial accounting
A: To solve the problem, I first calculated EBIT (Earnings Before Interest and Taxes) by using the…
Q: What is the actual total direct materials cost for the current period?
A: Step 1: Define Standard CostThe standard cost is the benchmark that a company set to produce one…
Q: The Waverly Company has budgeted sales for next year as follows: Quarter First Second Third…
A: To calculate the scheduled production for the third quarter, we need to use the following…
Q: stomer Care specialist x Bloomerang Customer Sup x M Fwd: Claims Support Speci × Indeed Resume x…
A:
Q: Answer question a and b please. Answer in full.
A: DateDescriptionUnits PurchasedUnits SoldCost per UnitTotal CostOctober 5Purchased 15 batteries @…
Q: For 15 years, Maria has owned and operated a seaside bakery and café called The Beachsider. Each…
A: Tax Consequences:Real estate contribution from Kyler: Due to the property's appreciation since…
Q: Please help with the Budgetary Cushion? the answer of of 56.3 % or 203.3% is in correct.
A: Step 1: We determine the Revenues or the Budgeted resources which is 1,065.1. Step 2: We determine…
Q: ljm
A: Step 1: Step 2: Step 3: Step 4:
Q: Rachel took out a personal loan for $4,500 with a monthly payment of $173.06 for 36 months.…
A: To determine the finance charge on Rachel's loan, we need to calculate the total amount she will pay…
Q: which of the following would be inappraited for an auditor to asek a client when exhibiting an…
A: An auditor's role is to examine the financial records and business transactions of a company to…
Q: If an investment of R50 000 is made in a fixed deposit account on 01 September 2022 and the interest…
A: 1. Interest Rate on Fixed DepositStep 1. Given the following information:Investment amount:…
Q: On January 1, 2020, Pepper Corp. had cash and common shares of $60,000. At that date, the company…
A: To determine the required amounts for Pepper Corp. for 2020, let's analyze each item based on the…
Q: Please Provide help with this Question
A: Ans) Initial Cash flow Amount Cash flow for building $ 1,030,000Market value of the Lot$…
Q: Mistake v. Fraud This assignment aligns with Outcome 5: Examine the role of the forensic accountant…
A: The balance sheet and profit loss statement accounts that could be affected by this oversight…
Q: On January 1, 2023, DMW Corporation issued a series of 100 convertible bonds, maturing in 5 years.…
A: Step 1:Convertible bonds is a type of debt instrument that can be converted into a predetermined…
Q: Help
A: Here's the breakdown:Beginning Inventory: 5,000 units * $9.20/unit = $46,000Purchase June 18: 4,500…
Q: Crazy Mountain Sports Inc. assembles and sells snowmobile engines. The company began operations on…
A: SalesSales (11,000 units) = $1,320,000Variable Cost of Goods Sold (COGS)To calculate the variable…
Q: Journalize the tRansactions
A: July 1: Stockholders invested $50,000 cash in exchange for common stock.Step 1: The company receives…
Q: hsl
A: The discount rate must be taken into account while deciding between Project A and Project B. The…
Q: What is the income tax basis in the remaining shares?
A: Total number of Wilma's shares = 2,800 sharesTax basis per share = $9,700Shares redeemed = 595…
Q: Give me an intro paragraph on how can ChatGPT impact corporate accounting and finance
A: ChatGPT, an advanced language model developed by OpenAI, has the potential to revolutionize various…
Q: Solve this problem
A: Total Overhead = Variable Overhead + Fixed OverheadSheffield Corp. prepared a fixed budget of 60,000…
Q: Procter & Gamble (P&G) reported total assets of $118.3 billion and total liabilities of $69.2…
A: Problem 1 - Procter & Gamble (P&G)EquityDividends paid$8.9 billionBeg. balance$47.8…
Q: Need answer the question
A: Step 1: Introduction to the High-Low MethodIn the domain of accounting, the high-low method and…
Q: The City of Amarillo is authorized to issue $3,000,000, 5 percent regular serial bonds in 2023 for…
A: 1. Bond Issuance Budgetary Entry Total Amount of Bonds Issued: $3,000,000Maturity Period: 10 years…
Q: The auditors’ responsibility for reporting violations of laws and regulations under Generally…
A: Detailed explanation:Under Generally Accepted Auditing Standards (GAAS), auditors focus on private…
Please help with this question
Step by step
Solved in 2 steps
- A firm is considering a new project which would be similar in terms of risk to its existing projects. The firm needs a discount rate for evaluation purposes. The firm has enough cash on hand to provide the necessary equity financing for the project. Also, the firm has 1,000,000 common shares outstanding with a current market price of GH¢11 per share. Next year’s dividend is expected to be GH¢1 per share and the firm estimates dividends will grow at 5% per year for the next several years. The firm also has 150,000 preferred shares outstanding with a current market price of GH¢10 per share. Dividend of GH¢0.9 per share is paid on preferred stock. The firm has a total of GH¢10,000,000 in debt outstanding. The debt stock is currently valued at of GH¢9,500,000. The yield on the debt is 8%. The firm’s tax rate is 20%. The project requires an initial capital investment of GH¢500,000. However, the project is expected to generate GH¢100,000 annually in perpetuity. Required: Calculate the…A firm is considering a new project which would be similar in terms of risk to its existing projects. The firm needs a discount rate for evaluation purposes. The firm has enough cash on hand to provide the necessary equity financing for the project. Also, the firm has 1,000,000 common shares outstanding with a current market price of GH¢11 per share. Next year's dividend is expected to be GH¢1 per share and the firm estimates dividends will grow at 5% per year for the next several years. The firm also has 150,000 preferred shares outstanding with a current market price of GH¢10 per share. Dividend of GH¢0.9 per share is paid on preferred stock. The firm has a total of GH¢10,000,000 in debt outstanding. The debt stock is currently valued at of GH¢9,500,000. The yield on the debt is 8%. The firm's tax rate is 20%. The project requires an initial capital investment of GH¢500,000. However, the project is expected to generate GH¢100,000 annually in perpetuity. Required: i. Calculate the…A firm is considering a new project which would be similar in terms of risk to its existing projed The firm needs a discount rate for evaluation purposes. The firm has enough cash on hand provide the necessary equity financing for the project. Also, the firm has 1,000,000 common shan outstanding with a current market price of GHe11 per share. Next year's dividend is expected be GHc1 per share and the firm estimates dividends will grow at 5% per year for the next sever years. The firm also has 150,000 preferred shares outstanding with a current market price GH¢10 per share. Dividend of GHe0.9 per share is paid on preferred stock. The firm has a total o GH¢10,000,000 in debt outstanding. The debt stock is currently valued at of GH¢9,500,000. Th yield on the debt is 8%. The firm's tax rate is 20%. The project requires an initial capital investmen of GHc500,000. However, the project is expected to generate GH¢100,000 annually in perpetuity. Required: i Calculate the WACC for this project?…
- Use the following given information of Greyhorse Partners to answer the following question. Greyhorse is willing to provide $1.2 million fundings in exchange for a share of the common stock in a firm called Bull-Builders. As this the first-stage financing, Greyhorse’s required rate of return is 50% per year based on a 5-year investment horizon without receiving any cash until the end of this period. Forecast of EBITDA for Bull-Builders in year 5 is $6m. EBITDA multiple of similar firms is 7 times. Bull-Builders’ projected balance sheet at year 5 includes $100,000 in cash and $1m in interest-bearing debt. What is the post-money value of the firms’ equity today? A. $42,000,000 B. $41,100,000 C. $4,212,720 D. $5,412,720A private equity firm is aiming to buy a company. Under private equity ownership, the company will earn an annual cash flow of $10mln up to infinity. The first cash flow is expected next year. The estimated IRR is 13%. What is the investment outlay (in millions) closest to?PetlQ, a pet service venture, is seeking the first-round financing. NaVenture, a professional venture capital firm, is considering to invest $8 million in PetlQ. NaVenture needs to decide to ask for how much percent equity ownership in PetlQ in exchange for this $8 million investment. NaVenture has a target annual rate of return of 30% on ventures at the similar stage of life cycle as PetlQ is currently in. The following table listing the 3 cash flow scenarios for PetlQ when NaVenture expected to exit at the end of 4 years. Amount invested $8,000,000 Required return 30% Outcome Probability Year0 2 3 4 Black Hole 0.25 Living Dead Venture Utopia O $15,000,000 O $80,000,000 0.55 0.3 In order to minimize its investment risk, NaVenture requires an annual $2 million preferred dividend under the utopia scenario (including the exit year) in addition to the $80 million cash inflow in Year 4 (the exit year). No preferred annual cash flows are expected under either the black hole or the living…
- A group of investors is intent on purchasing a publicly traded company and wants to estimate the highest price they can reasonably justify paying. The target company’s equity beta is 1.20 and its debt-to-firm value ratio, measured using market values, is 60 percent. The investors plan to improve the target’s cash flows and sell it for 12 times free cash flow in year five. Projected free cash flows and selling price are as follows. ($ millions) Year 1 2 3 4 5 Free cash flows $38 $53 $58 $63 $ 63 Selling price $ 756 Total free cash flows $38 $53 $58 $63 $ 819 To finance the purchase, the investors have negotiated a $530 million, five-year loan at 8 percent interest to be repaid in five equal payments at the end of each year, plus interest on the declining balance. This will be the only interest-bearing debt outstanding after the acquisition. Selected Additional Information Tax rate 40 percent Risk-free interest rate 3 percent Market risk…A group of investors is intent on purchasing a publicly traded company and wants to estimate the highest price they can reasonably justify paying. The target company’s equity beta is 1.20 and its debt-to-firm value ratio, measured using market values, is 60 percent. The investors plan to improve the target’s cash flows and sell it for 12 times free cash flow in year five. Projected free cash flows and selling price are as follows. ($ millions) Year 1 2 3 4 5 Free cash flows $38 $53 $58 $63 $ 63 Selling price $ 756 Total free cash flows $38 $53 $58 $63 $ 819 To finance the purchase, the investors have negotiated a $530 million, five-year loan at 8 percent interest to be repaid in five equal payments at the end of each year, plus interest on the declining balance. This will be the only interest-bearing debt outstanding after the acquisition. Selected Additional Information Tax rate 40 percent Risk-free interest rate 3 percent Market risk…A group of investors is intent on purchasing a publicly traded company and wants to estimate the highest price they can reasonably justify paying. The target company’s equity beta is 1.20 and its debt-to-firm value ratio, measured using market values, is 60 percent. The investors plan to improve the target’s cash flows and sell it for 12 times free cash flow in year five. Projected free cash flows and selling price are as follows. ($ millions) Year 1 2 3 4 5 Free cash flows $33 $48 $53 $58 $ 58 Selling price $ 696 Total free cash flows $33 $48 $53 $58 $ 754 To finance the purchase, the investors have negotiated a $480 million, five-year loan at 8 percent interest to be repaid in five equal payments at the end of each year, plus interest on the declining balance. This will be the only interest-bearing debt outstanding after the acquisition. Selected Additional Information Tax rate 40 percent Risk-free interest rate 3 percent Market risk…
- A group of investors is intent on purchasing a publicly traded company and wants to estimate the highest price they can reasonably justify paying. The target company's equity beta is 1.20 and its debt-to-firm value ratio, measured using market values, is 60 percent. The investors plan to improve the target's cash flows and sell it for 12 times free cash flow in year five. Projected free cash flows and selling price are as follows. ($ millions) Year 5 1 $38 Free cash flows 2 3 4 $53 $58 $63 $ 63 $ 756 Selling price Total free cash flows $38 $53 $58 $63 $819 To finance the purchase, the investors have negotiated a $530 million, five-year loan at 8 percent interest to be repaid in five equal payments at the end of each year, plus interest on the declining balance. This will be the only interest-bearing debt outstanding after the acquisition. Selected Additional Information Tax rate 40 percent Risk-free interest rate 3 percent Market risk premium 5 percent a. Estimate the target firm's…An all-equity firm consists of a single project that will produce a perpetual cash flow of either $100M (good state) or $30M (bad state) next year. The probability of the good state is 30 percent. The beta of the asset cash flows is 1.25 and the risk-free rate is 3 percent and the market risk premium is 8 percent. There are 6M shares outstanding. Suppose the firm announces it will issue $40M in debt. The debt has an interest rate of 8 percent, and will mature in 3 years. Because the debt is ___ , any bankruptcy costs would ___ the firm's share price after the announcement. a. Safe, not change b. risky, raise c. risky, lowerA 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 startup