Question : Miller Venture Capital Miller Venture Capital made a $5 million investment : 1325804

 

 

Miller Venture Capital

Miller Venture Capital made a $5 million investment in Bavarian Sausage Technology (BST) 8 years ago and in return received 1 million shares of convertible preferred stock that can be converted into 2 shares of common stock. After all stock has been converted BST will have 15 million shares outstanding. In addition, the company is planning on issuing an additional 3 million shares in an IPO.

 

34.Refer to Miller Venture Capital. What fraction of BST’s common stock will Miller own after the IPO?

a.15.24%

b.11.11%

c.45.32%

d.23.56%

 

 

 

35.Refer to Miller Venture Capital. If the value of BST stock is $25 at the end of the first trading day, what is the value of Miller’s investment?

a.$50 million

b.$25 million

c.$30 million

d.$5 million

 

 

 

36.Refer to Miller Venture Capital. If BST’s stock trades at $25 at the end of the first trading day, what is the annual return on Miller’s investment?

a.900.00%

b.24.65%

c.33.35%

d.350.00%

 

 

 

37.Miller Venture Capital Fund wants to average a 34.375% return on its investments. Of the 15 total investments 5 have failed (i.e a return of -100%), and 7 generated a zero return. Two other projects yielded a return of 80% and 85%, respectively. What has to be the return on the last outstanding investment in order for Miller to reach its investment goal?

a.425%

b.1,250%

c.885%

d.680%

 

 

 

38.Miller Venture Capital Fund wants to average a 50% return on its investments. Of the 15 total investments 5 have failed (i.e a return of -100%), and 7 generated a zero return. What has to be the average return on the three outstanding investment in order for Miller to reach its investment goal?

a.268%

b.417%

c.124%

d.930%

 

 

 

39.John Smith seeks $7.5 million from a VC fund. John and the VC agree that the company should be ready to go public in 4 years. At that time the company should have a net income of $3.75 million. If comparable firms are expected to be trading at a P/E ratio of 18, what will be the company’s market capitalization at the time of the IPO?

a.$7.5 million

b.$67.5 million

c.$135 million

d.$95.7 million

 

 

 

40.John Smith seeks $7.5 million from a VC fund. John and the VC agree that the company should be ready to go public in 4 years. At that time the company should have a market capitalization of $254.35 million. If the VC requires a 54% return on their investment, what is the VC’s stake at the time of the IPO?

a.$7.5 million

b.$42.18 million

c.$254.35 million

d.$36.74 million

 

 

 

41.John Smith seeks $7.5 million from a VC fund. John and the VC agree that the company should be ready to go public in 4 years. At that time the company should have a market capitalization of $146.75 million. If the VC requires a 54% return on their investment, what is the fraction of the firm that the VC will receive for its $7.5 million investment?

a.28.74%

b.71.26%

c.54.00%

d.38.57%

 

 

 

WIMMP Venture Capital

“Where Is My Money” Professional Venture Capital (WIMMP) made a $10 million investment in Bavarian Sausage Technology (BST) 5 years ago and in return received 2.5 million shares of convertible preferred stock that can be converted into 1.5 shares of common stock. After all stock has been converted BST will have 22.5 million shares outstanding. In addition, the company is planning on issuing an additional 5 million shares in an IPO.

 

42.What fraction of BST’s common stock will WIMMP own after the IPO?

a.16.67%

b.11.11%

c.9.09%

d.13.64%

 

 

 

43.If the value of BST stock is $21.50 at the end of the first trading day, what is the value of WIMMP’s investment?

a.$48.375M

b.$80.625M

c.$63.425M

d.$37.557M