Questions from Entrepreneurial Finance

Q: Ratchets.com anticipates that it will need $15,000

Ratchets.com anticipates that it will need $15,000,000 in venture capital to achieve a terminal value of $300,000,000 in five years. A. Assuming it is a seed stage firm with no existing investors, w...

Q: Suppose a venture fund wishes to base its required return (used

Suppose a venture fund wishes to base its required return (used in discounting future terminal values) on its historical experience and suggests merely averaging the rates on the last three concluded...

Q: 1,000,000 initial founders’ shares (instead of the

1,000,000 initial founders’ shares (instead of the original 2,000,000 shares). What changes?

Q: A share of a venture’s preferred stock is convertible into 1.

A share of a venture’s preferred stock is convertible into 1.5 shares of its common stock. The dividend on the preferred stock is $.50 per share. A. If the firm’s common stock is currently trading at...

Q: Why is the (1-tax rate) in the WACC

Why is the (1-tax rate) in the WACC? How does the government pay the tax rebate on interest – through a flow or in the rate?

Q: A venture has a $500,000 bank loan outstanding,

A venture has a $500,000 bank loan outstanding, a long-term debt obligation of $900,000, accounts payable of $200,000, and accounts receivable of $350,000. A. If the venture’s equity value is $2,450,0...

Q: Why is the market value of currently issued debt subtracted from the

Why is the market value of currently issued debt subtracted from the enterprise value (in a debt-and-equity-only firm) to arrive at the value of equity? Why are future debt issues ignored by the proce...

Q: The Datametrix Corporation has been in operation for one full year (

The Datametrix Corporation has been in operation for one full year (2016). Financial statements are shown below. Sales are expected to grow at a 30 percent annual rate for each of the next three yea...

Q: What is an interest rate? What is default risk?

What is an interest rate? What is default risk?

Q: The CCC (triple C) Venture has issued convertible preferred stock

The CCC (triple C) Venture has issued convertible preferred stock to its venture investors. Each share of preferred stock is convertible into .80 shares of common stock and pays an annual cash divide...