. A venture capitalist wants to invest $1,000,000 in your company Chatt-Town Industries. You do not expect to make a profit until year four when your net income (profit) is expected to be $3,000,000. The common stock of Nash-Vegas Corporation, a "comparable" firm, currently trades in the over-the- counter market at $8 per share. Nash-Vegas's net income (profit) for the most recent year was $1,000,000 and the firm has 500,000 shares of common stock outstanding (for a market capitalization of $4,000,000). Apply the VC method to determine the value of the Chatt-Town Industries at the end of four years. What is the comparable firm's earnings per share (EPS)?
. A venture capitalist wants to invest $1,000,000 in your company Chatt-Town Industries. You do not expect to make a profit until year four when your net income (profit) is expected to be $3,000,000. The common stock of Nash-Vegas Corporation, a "comparable" firm, currently trades in the over-the- counter market at $8 per share. Nash-Vegas's net income (profit) for the most recent year was $1,000,000 and the firm has 500,000 shares of common stock outstanding (for a market capitalization of $4,000,000). Apply the VC method to determine the value of the Chatt-Town Industries at the end of four years. What is the comparable firm's earnings per share (EPS)?
Chapter11: Venture Capital Valuation Methods
Section: Chapter Questions
Problem 9EP
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Transcribed Image Text:2. A venture capitalist wants to invest $1,000,000 in your company Chatt-Town Industries. You do not
expect to make a profit until year four when your net income (profit) is expected to be $3,000,000.
The common stock of Nash-Vegas Corporation, a "comparable" firm, currently trades in the over-the-
counter market at $8 per share. Nash-Vegas's net income (profit) for the most recent year was
$1,000,000 and the firm has 500,000 shares of common stock outstanding (for a market
capitalization of $4,000,000). Apply the VC method to determine the value of the Chatt-Town
Industries at the end of four years.
A. What is the comparable firm's earnings per share (EPS)?
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