PRINCIPLES OF MANAGERIAL FINANCE (SUBSCR
15th Edition
ISBN: 9780137695621
Author: SMART
Publisher: PEARSON C
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Textbook Question
Chapter 2, Problem 1OR
In the chapter opener, you read about the spectacular rise of Airbnb. One of the early investors in Airbnb was the venture capital firm Sequoia Capital, which contributed $600,000 in 2009. Assume that by making that early-stage investment, Sequoia Capital purchased a 10% ownership stake in Airbnb. If the company was worth $31 billion in 2017, how much had the value of Airbnb grown in those 8 years?
Expert Solution & Answer
Summary Introduction
To discuss:
The growth of value of Airbnb in 8 years.
Introduction:
Venture capitalist firms are business that takes in money from many individual investors or institutional investors and make investments decision on their behalf.
Explanation of Solution
Given information:
The venture capital invested $600,000 in the firm which is 10 % of the total worth. The current worth of the company is $31 billion.
Explanation:
The initial worth of the firm can be calculated using the following equation,
The change in value of the firm can be calculated as
Thus, the value of the firm has grown by $30,994,000,000 over 8 years.
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Chapter 2 Solutions
PRINCIPLES OF MANAGERIAL FINANCE (SUBSCR
Ch. 2.1 - What are financial institutions? Describe the role...Ch. 2.1 - Prob. 2.2RQCh. 2.1 - Describe the role of commercial banks, investment...Ch. 2.2 - What role do financial markets play in our...Ch. 2.2 - Prob. 2.5RQCh. 2.2 - Prob. 2.6RQCh. 2.2 - Prob. 2.7RQCh. 2.2 - Describe the role of capital markets from the...Ch. 2.3 - Prob. 2.9RQCh. 2.3 - Prob. 2.10RQ
Ch. 2.4 - What is the difference between an angel investor...Ch. 2.4 - Prob. 2.12RQCh. 2.4 - Prob. 2.13RQCh. 2.4 - Prob. 2.14RQCh. 2.5 - Prob. 2.15RQCh. 2.5 - What is a mortgage-backed security? What basic...Ch. 2.5 - Prob. 2.17RQCh. 2.5 - Why do falling home prices create an incentive for...Ch. 2.5 - Why does a crisis in the financial sector spill...Ch. 2 - In the chapter opener, you read about the...Ch. 2 - Transaction costs Assume that you use a TD...Ch. 2 - Prob. 2.1WUECh. 2 - Prob. 2.2WUECh. 2 - Prob. 2.3WUECh. 2 - Prob. 2.4WUECh. 2 - Prob. 2.5WUECh. 2 - Your broker calls to offer you the investment...Ch. 2 - Transaction costs You would like to purchase one...Ch. 2 - Transaction costs In late December you decide, for...Ch. 2 - Initial public offering On April 13, 2017, Yext...Ch. 2 - Initial public offering A Brazilian company called...Ch. 2 - Prob. 2.5PCh. 2 - Prob. 1SECh. 2 - Integrative Case 1 Merit Enterprise Corp. Sara...
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