Question
In: Finance
You are a manager in a start-up firm based in Bengaluru. The firm is planning to...
You are a manager in a start-up firm based in Bengaluru. The firm is planning to go public and you have been tasked at arriving at an approximate valuation for the firm.
The firm is in the business of providing medical grade pure water. The asset beta of the firms’ in the industry with similar size is 1.3 and 1.4.
The risk free rate is 5% and the market risk premium is 7%.
At present, the firm doesn’t have any debt, however the management intends to target a debt equity ratio of 1.
The cost of debt for similar firms with similar capital structure is 8.5%. What is the WACC of the firm given the intended capital structure ?
What should be the value of the firm if the Free cash flow to the firm you have arrived at is INR 12 million and is expected to grow at a rate of 2% in perpetuity.
Solutions
jeff jeffy answered 2 years agoRelated Solutions
You are a manager in a start-up firm based in Bengaluru. The firm is planning to...
You are a manager in a start-up firm based in Bengaluru. The
firm is planning to go public and you have been tasked at arriving
at an approximate valuation for the firm. The firm is in the
business of providing medical grade pure water. The asset beta of
the firms’ in the industry with similar size is 1.3 and 1.4. The
risk free rate is 5% and the market risk premium is 7%. At present,
the firm doesn’t have any...
you are the marketing manager for a start-up company the manufacturers farm tractors. you are planning...
you are the marketing manager for a start-up company
the manufacturers farm tractors. you are planning to wnter the
markets in the US, Japan, and India. What promotion strategy would
you use for each market and what will your supply chain look like?
The product will be manufactured in Mexico woth some components
made in the US and China. how would you get the products to the
customers?
You have a new start-up firm. You think that the value of your start-up is around...
You have a new start-up firm. You think that the value of your
start-up is around $60 million, but you will need to do a serious
NPV analysis before you know the precise value. You are planning to
have a 50% debt-to-value ratio, and that you will continuously
rebalance to maintain this leverage. You have information on two
other companies. The names of these companies are “Comp A” and
“Comp B”. Comp A has the same business risk as your...
As a young entrepreneur, you are planning to open a budget hotel with a start-up capital...
As a young entrepreneur, you are planning to open a budget hotel
with a start-up capital of RM 350,000. The hotel will have
single-bed rooms with an expected rate of RM 90 per room. An
average room occupancy rate is about 250 per month. Annual
operating expenses for which cover administration, utility and
maintenance costs are about RM 80,000. The cash flows will be
expected to remain unchanged for the next 10 years. It is expected
that the before-tax minimum...
A firm is planning to start a new project. The firm spent $45,000 on a market...
A firm is planning to start a new project. The firm spent
$45,000 on a market study and $30,000 on consulting three months
ago. If the firm starts the project, it will spend $600,000 for new
machinery, $50,000 for installation, and $20,000 for shipping. The
machine will be depreciated via the 5-year MACRS depreciation
method (20.00%, 32.00%, 17.20%, 11.50%, 11.50%, and 5.8%,
respectively, from Year 1 to Year 6). The expected sales increase
from this new project is $450,000 a...
You are planning a business venture and have determined the following: 1) initial start-up costs will...
You are planning a business venture and have determined the
following: 1) initial start-up costs will be $50,000; 2) revenue
will be $25,000 per year for 6 years; 3) costs will be $11,000 per
year; and 4) you will be able to sell the assets at the end of the
6 years for a salvage value of $3000. If the required rate of
return is 12%, what is the net present value? what is the Internal
Rate of Return?
A Venture Capital firm(VC Inc.) is planning to invest in an e-commerce start-up(EC ltd) VC Inc,...
A Venture Capital firm(VC Inc.) is planning to invest in an
e-commerce start-up(EC ltd) VC Inc, wants a large stake in this
start-up firm(EC Ltd) and has plans to go for a 21% stake in the
company. EC Ltd. owners are willing to give up a 21% stake. Finance
Manager Sui at VC Inc. has made cash flow projections for EC Ltd.
Sui has suggested the following:
Cash Flows of EC Ltd. will grow at a constant rate of 8%...
You work for a venture capital firm and are approached to finance a new high-tech start-up....
You work for a venture capital firm and are approached to
finance a new high-tech start-up. While you believe in the business
idea, you also believe it is very risky. What strategies can help
to mitigate the risk to your firm? Explain how these measures would
work.
Your start-up company needs capital. Right now, you own 100% of the firm with 10.4 million...
Your start-up company needs capital. Right now, you own 100%
of the firm with 10.4 million shares. You have received two offers
from venture capitalists. The first offers to invest $2.97 million
for 1.05 million new shares. The second offers $1.97 million for
461,000 new shares.
a. What is the first offer's post-money valuation of the
firm?
b. What is the second offer's post-money valuation of the
firm?
c. What is the difference in the percentage dilution caused by
each...
Your start-up company needs capital. Right now, you own 100% of the firm with 9.9 million...
Your start-up company needs capital. Right now, you own 100%
of the firm with 9.9 million shares. You have received two offers
from venture capitalists. The first offers to invest $ 2.94 million
for 1.13 million new shares. The second offers $2.02 million for
503,000 new shares.
a. What is the first offer's post-money valuation of the
firm?
The post-money valuation will be $_________. (Round to the
nearest dollar.)
b. What is the second offer's post-money valuation of the
firm?...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- The legal landscape is perpetually changing. Psychologists must remain abreast of these changes to avoid potentially...
- We are evaluating a project that costs $1.68 million, has a six-year life, and has no...
- In C++ Having call-by-reference allows one to use storeback parameters, i.e., parameters whose values are transmitted...
- You must evaluate a proposal to buy a new milling machine. The base price is $175,000,...
- “Triangle Guessing” game in Python The program accepts the lengths of three (3) sides of a...
- THIS PROGRAM HAS TO BE WRITTEN IN C Single function to perform the parity computation on...
- Consider a buffer system consisting of Benzoic acid (pKa = 4.20) and sodium benzoate, a) Would...
ADVERTISEMENT