(answer the next 3 questions with the following information.) A fictitious VC firm, EBV, that is considering a series A investment in a start-up company named Newco. The terms specify that EBV invests $5 million for 5M shares into Newco, which currently has 10M shares allotted to employees and founders. Security structure is as follows: First pay [one] times the Original Purchase Price on each share of Series A Preferred. Thereafter, the Series A Preferred participates with the Common Stock pro rata on an as-converted basis. The liquidation return is capped at four times OPP. EBV has committed capital of $100M with 2% management fee. GP% is 10%. If the exit value is $72, how much is the distribution to the VC? O $32M O $27.3 O $24M O $10.7M
(answer the next 3 questions with the following information.) A fictitious VC firm, EBV, that is considering a series A investment in a start-up company named Newco. The terms specify that EBV invests $5 million for 5M shares into Newco, which currently has 10M shares allotted to employees and founders. Security structure is as follows: First pay [one] times the Original Purchase Price on each share of Series A Preferred. Thereafter, the Series A Preferred participates with the Common Stock pro rata on an as-converted basis. The liquidation return is capped at four times OPP. EBV has committed capital of $100M with 2% management fee. GP% is 10%. If the exit value is $72, how much is the distribution to the VC? O $32M O $27.3 O $24M O $10.7M
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
Section: Chapter Questions
Problem 1PS
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![(answer the next 3 questions with the following information.)
A fictitious VC firm, EBV, that is considering a series A investment
in a start-up company named Newco. The terms specify that EBV
invests $5 million for 5M shares into Newco, which currently has
10M shares allotted to employees and founders. Security structure
is as follows:
First pay [one] times the Original Purchase Price on each share of
Series A Preferred. Thereafter, the Series A Preferred participates
with the Common Stock pro rata on an as-converted basis. The
liquidation return is capped at four times OPP. EBV has committed
capital of $100M with 2% management fee. GP% is 10%.
If the exit value is $72, how much is the distribution to the VC?
O $32M
O $27.3
O $24M
O $10.7M](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F165e062e-0af8-4c2c-b719-0c4f6fd9cd3b%2Ff162ac39-5c90-4fa6-9da2-3e1fee0c40d6%2Fxtk02xt_processed.jpeg&w=3840&q=75)
Transcribed Image Text:(answer the next 3 questions with the following information.)
A fictitious VC firm, EBV, that is considering a series A investment
in a start-up company named Newco. The terms specify that EBV
invests $5 million for 5M shares into Newco, which currently has
10M shares allotted to employees and founders. Security structure
is as follows:
First pay [one] times the Original Purchase Price on each share of
Series A Preferred. Thereafter, the Series A Preferred participates
with the Common Stock pro rata on an as-converted basis. The
liquidation return is capped at four times OPP. EBV has committed
capital of $100M with 2% management fee. GP% is 10%.
If the exit value is $72, how much is the distribution to the VC?
O $32M
O $27.3
O $24M
O $10.7M
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