Question XYZ is a biotech company. The founder believes they can sell the company for $40 million in five years. The founder currently holds 1 million shares. The company needs $2 million in the first round and $3 million in the second round three years later. The discount rate for the first round is 40% and 30% for the second round. What is the stock price the VC should pay in the first round? O 5.53 3.02 4.88

Question XYZ is a biotech company. The founder believes they can sell the company for $40 million in five years. The founder currently holds 1 million shares. The company needs $2 million in the first round and $3 million in the second round three years later. The discount rate for the first round is 40% and 30% for the second round. What is the stock price the VC should pay in the first round? O 5.53 3.02 4.88

PFIN (with PFIN Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)

6th Edition

ISBN:9781337117005

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter12: Investing In Stocks And Bonds

Section: Chapter Questions

Problem 3FPE

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