Homework Help is Here – Start Your Trial Now!
Business
Finance
Ruby Tui Venture Capital has a target rate of 50% per annum, makes an investment of $4.0 million today, and foresees an exit of $80 million in five years. The exit value includes the $4.0 million investment. There are currently 400,000 shares. a) What ownership percentage does the VC require to make the investment? b) How many new shares are issued to the VC? c) The probability of success (exit at $80 million) is 30% and the probability of failure (exit at $0) is 70%. What is the expected IRR?

Ruby Tui Venture Capital has a target rate of 50% per annum, makes an investment of $4.0 million today, and foresees an exit of $80 million in five years. The exit value includes the $4.0 million investment. There are currently 400,000 shares. a) What ownership percentage does the VC require to make the investment? b) How many new shares are issued to the VC? c) The probability of success (exit at $80 million) is 30% and the probability of failure (exit at $0) is 70%. What is the expected IRR?

Essentials Of Investments
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
See similar textbooks
icon
Related questions
Question

pls answer a b and c

Ruby Tui Venture Capital has a target rate of 50% per annum, makes an investment of $4.0 million today, and foresees an exit of $80 million in five years. The exit value includes the $4.0 million investment. There are currently 400,000 shares. a) What ownership percentage does the VC require to make the investment? b) How many new shares are issued to the VC? c) The probability of success (exit at $80 million) is 30% and the probability of failure (exit at $0) is 70%. What is the expected IRR?
Transcribed Image Text:Ruby Tui Venture Capital has a target rate of 50% per annum, makes an investment of $4.0 million today, and foresees an exit of $80 million in five years. The exit value includes the $4.0 million investment. There are currently 400,000 shares. a) What ownership percentage does the VC require to make the investment? b) How many new shares are issued to the VC? c) The probability of success (exit at $80 million) is 30% and the probability of failure (exit at $0) is 70%. What is the expected IRR?
Expert Solution
steps

Step by step

Solved in 4 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Dividends
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS