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Valuation Techniques - Assignment Example

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The percentage of the company that needs to be given up for $1.5 m investment Required ROR by investor(s): 25% Net income in five years: $ 3.2 m Expected P/E ratio in four years: 12 times Problem MV5 = (P/E4)* (E5) Whereby (E5) is 3.2 and (P/E4) is 12. …
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Valuation Techniques
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Download file to see previous pages Discount formulae D= 1/ (1+p) ^n Whereby P is the periodic interest, which is 5% N is the number of years to repay the debt, which is 6 years in our case. Therefore, to determine a present value of the future payments, we will have to multiply the amount owed by the discount factor. The portion of the company that should be given up if there is a need for $1.6 m in venture capital The portion of the venture to be given up= Venture capital needed/ MV0 Therefore, we will take the period in paying back the debt, which is 6 years multiply by $ 1.6m in venture capital. Its computation will be as follows; 6*1.6= $ 9.6M The company will, therefore, give up $ 9.6m of its portion if there is a need for $1.6 m in venture capital. ...Download file to see next pagesRead More
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