ENTR 4222 EXAM STUDY GUIDE
To obtain the percent ownership to be sold in order to expect to provide the venture
investor's target return, one must consider the cash investment today and the cash
return at exit __________ by the venture investor's target return, then __________ today's
cash investment by the venture's NPV. - Answer discounted; divide
The value of the existing venture plus the proceeds from the potential new equity issue
is known as: - Answer post-money valuation
Financing provided in sequences of rounds rather than all at one time is known as: -
Answer staged financing
Which of the following does a P/E multiple refer to? - Answer price/earnings multiple
Which of the following financing rounds does not dilute the ownership of founders? -
Answer founder's round
During the exit period, which of the following will have last crack at the venture's
wealth? - Answer initial equity investors of the venture
Which of the following is not a variation of the venture capital valuation method? -
Answer actual dividend payments
Estimate the value of a privately held firm based on the following information: stock
price of a comparable firm =$20; net income of a comparable firm = $20,000; number of
shares outstanding for the comparable firm = 10,000;and earnings per share for the
target firm = $3. - Answer $30
Determine the net income of a comparable firm based on the following information: the
value of the target firm =$4,000,000; net income of the target firm = $200,000; stock
price of the comparable firm = $30; and number of shares of stock outstanding for the
comparable firm = 300,000. - Answer $450,000
A potential investor is willing to provide $500,000 in first-round financing with the
expectation of a 50% annualcompound rate of return over the next five years. Founders
currently hold 1,000,000 million shares of stock. Theventure is expected to produce
$500,000 in net income in year 5. A similar firm with annual net income of$1,000,000
sold shares to the public for $10,000,000. What is the post-money valuation? - Answer
$658,354
A potential investor is willing to provide $500,000 in first-round financing with the
expectation of a 50% annualcompound rate of return over the next five years. Founders
currently hold 1,000,000 million shares of stock. Theventure is expected to produce
$500,000 in net income in year 5. A similar firm with annual net income of$1,000,000
sold shares to the public for $10,000,000. What is the value of the venture at the end of
year 5 usingdirect capitalization? - Answer $5,000,000
To obtain the percent ownership to be sold in order to expect to provide the venture
investor's target return, one must consider the cash investment today and the cash
return at exit __________ by the venture investor's target return, then __________ today's
cash investment by the venture's NPV. - Answer discounted; divide
The value of the existing venture plus the proceeds from the potential new equity issue
is known as: - Answer post-money valuation
Financing provided in sequences of rounds rather than all at one time is known as: -
Answer staged financing
Which of the following does a P/E multiple refer to? - Answer price/earnings multiple
Which of the following financing rounds does not dilute the ownership of founders? -
Answer founder's round
During the exit period, which of the following will have last crack at the venture's
wealth? - Answer initial equity investors of the venture
Which of the following is not a variation of the venture capital valuation method? -
Answer actual dividend payments
Estimate the value of a privately held firm based on the following information: stock
price of a comparable firm =$20; net income of a comparable firm = $20,000; number of
shares outstanding for the comparable firm = 10,000;and earnings per share for the
target firm = $3. - Answer $30
Determine the net income of a comparable firm based on the following information: the
value of the target firm =$4,000,000; net income of the target firm = $200,000; stock
price of the comparable firm = $30; and number of shares of stock outstanding for the
comparable firm = 300,000. - Answer $450,000
A potential investor is willing to provide $500,000 in first-round financing with the
expectation of a 50% annualcompound rate of return over the next five years. Founders
currently hold 1,000,000 million shares of stock. Theventure is expected to produce
$500,000 in net income in year 5. A similar firm with annual net income of$1,000,000
sold shares to the public for $10,000,000. What is the post-money valuation? - Answer
$658,354
A potential investor is willing to provide $500,000 in first-round financing with the
expectation of a 50% annualcompound rate of return over the next five years. Founders
currently hold 1,000,000 million shares of stock. Theventure is expected to produce
$500,000 in net income in year 5. A similar firm with annual net income of$1,000,000
sold shares to the public for $10,000,000. What is the value of the venture at the end of
year 5 usingdirect capitalization? - Answer $5,000,000
