XYZ is a biotech company. The founder believes they can sell the company for $50 million in four years. They need $5 million in capital now, and the founder currently holds 1 million shares. The discount rate is 50%. What is the stock price the VC should pay for the investment? A. 3.02 B. 4.88 C. 5.53

XYZ is a biotech company. The founder believes they can sell the company for $50 million in four years. They need $5 million in capital now, and the founder currently holds 1 million shares. The discount rate is 50%. What is the stock price the VC should pay for the investment? A. 3.02 B. 4.88 C. 5.53

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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