Caleb Clark Ventures invests $4 million in convertible preferred stock in a company with an $12 million pre-money valuation. The term sheet shows the investment is non- participating with 1x liquidation preference. a) What is the ownership percentage of the VC after the investment?
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- Suppose that a bank purchased 15 million shares of Company E. The shares are bid $34.2 and offer $35.4. The mean and standard deviation of the bid-ask spread are 0.034483 and 0.054, respectively. What is the cost of liquidation that we are 99% confident will not be exceeded (i.e., in a stressed market condition)? O 2.402 O 0.259 O 1.201Caleb Clark Ventures invests $2 million in convertible preferred stock in a company with an $8 million pre-money valuation. The term sheet shows the investment is non-participating with 1x liquidation preference. A) Assume the preferred stock is participating. At an exit value of $15,000,000, what is the payoff to the common stockholders (i.e. Founders & Management)? B) If the VC owned non-participating convertible preferred stock with a 2x liquidation preference at what exit value is the VC indifferent between either converting or not converting?BK Corporation has a value of operations equal to P2,100, short-term investments of P100, debt of P200, and 100 shares of stock. If BK converts its short-term investments to cash and repurchases P100 of its stock, what is the resulting estimated intrinsic stock price and how many shares remain outstanding?
- Oriole Inc is considering one of three options: (1) paying a $0.43 cash dividend, (2) distributing a 6% stock dividend, or (3) effecting a 4-for-1 stock split. The current fair value is $16 per share. Help Oriole decide what to do by completing the following chart (treat each possibility independentiy): Before Action After Cash Dividend After Stock Dividend After Stock Split $1921,000 Total assets Total $69,000 liabilities Common 1,064,000 shares Retained 788,000 earnings Total shareholders' 1.852,000 equity Total liabilities and $1.921,000 24 shareholders equity Number of common 56,000 sharesF has 300,000 shares outstanding with a market value of $25 each and no debt. The of F’s equity is 0.9, the risk-free rate is 4% and the expected return of the market portfolio is 9%. F considers the following alternative operation Operation : F buys an asset A worth $2,200,000 (at market value). This purchase is financed by issuing risk-free debt for the same amount. Following the operation, F ’s equity beta increases to 1. Compute the systematic risk A of the asset A bought by F.If iOS Corp. issues an additional $8 million of debt and uses this money to retire common stock, what will be the expected return on the stock? Assume that the change in capital structure does not affect the risk of the debt, and recall that the WACC under the initial capital structure is 13.85%. Enter your answer as a percentage. Do not include the percentage sign in your answer. Enter your answer rounded to 2 DECIMAL PLACES. TE= Number Click "Verify" to proceed to the next part of the question.
- Assume Intervale Railway is considering investing in Pale Co. stock for three months. The investment will represent 5% of the voting stock of Pale Co. How would the investment be classified? a. Significant influence equity investment b. No significant influence equity investment c. Held-to-maturity debt investment d. Controlling interest equity investmentElias Corporation shared the following prospective financial information to a group of private equity investors. You were tasked to compute for the approximate price that should be set if the investor buys out 20% share in Elias Company. 2025 3,500,000 4,000,000 875,000 1,000,000 750,000 2021 2,250,000 562,500 750,000 937,500 450,000 200,000 287,500 2022 2,750,000 687,500 750,000 1,312,500 550,000 200,000 562,500 2023 3,250,000 812,500 750,000 1,687,500 650,000 200,000 837,500 2024 Revenues Variable Cost of Goods Sold Fixed Cost of Goods Sold Gross Profit Variable Operating Expenses Fixed Operating Expenses | Operating Income 750,000 1,875,000 2,250,000 800,000 700,000 200,000 200,000 975,000 1,250,000 Other pertinent information can be found below: • Depreciation of P500,000 is included in fixed cost of goods sold while P100,000 of depreciation is charged to fixed operating expenses. Income tax rate is 20%. • Elias Corporation estimates it will need P200,000 cash on an annual basis to…Company A has a market capitalization of $2410539999 and 22833777 shares outstanding. It plans to distribute $35977773 through an open market repurchase. Assuming perfect capital markets: What will the price per share of the firm be right after the repurchase?
- ABCO Ventures is investing $1.2 million into Showco, and ABCO is receiving a 35% equity interest in Showco in return. Showco’s pre-money valuation is approximately: a. $420,000 b. $1.2 millionc. $2.2 million d. $3.4 millione. None of the above.Elias Corporation shared the following prospective financial information to a group of private equity investors. You were tasked to compute for the approximate price that should be set if the investor buys out 20% share in Elias Company. 2021 2,250,000 562,500 750,000 937,500 450,000 200,000 287,500 2022 2,750,000 687,500 750,000 1,312,500 550,000 200,000 562,500 2023 3,250,000 812,500 750,000 1,687,500 650,000 200,000 837,500 2025 3,500,000 4,000,000 875,000 1,000,000 750,000 2024 Revenues Variable Cost of Goods Sold Fixed Cost of Goods Sold Gross Profit Variable Operating Expenses Fixed Operating Expenses Operating Income 750,000 1,875,000 2,250,000 800,000 700,000 200,000 200,000 975,000 1,250,000 Other pertinent information can be found below: • Depreciation of P500,000 is included in fixed cost of goods sold while P100,000 of depreciation is charged to fixed operating expenses. • Income tax rate is 20%. • Elias Corporation estimates it will need P200,000 cash on an annual basis to…Suppose IWT has decided to distribute $50 million, which it presently is holding in liquid short-term investments. IWT’s value of operations is estimated to be about $1,937.5 million; it has $387.5 million in debt and zero preferred stock. As mentioned previously, IWT has 100 million shares of stock outstanding. Assume that IWT has not yet made the distribution. What is IWT’s intrinsic value of equity? What is its intrinsic stock price per share? Now suppose that IWT has just made the $50 million distribution in the form of dividends. What is IWT’s intrinsic value of equity? What is its intrinsic stock price per share? Suppose instead that IWT has just made the $50 million distribution in the form of a stock repurchase. Now what is IWT’s intrinsic value of equity? How many shares did IWT repurchase? How many shares remained outstanding after the repurchase? What is its intrinsic stock price per share after the repurchase?
