Answers For Questions!

6 Returns on Alternative Investments 7 8 Probability T-Bills 0.1 2.0% U.S. Collections Rubber 20.5% 3.5% -16.5% High Tech -30.5% -9.5% 9 Recession Market 2-Stock portfolio Portfolio -19.5% ? 10 Below

14
Suppose the venture investor wants to own 15% of the company for
$5 million investment. What is the pre-money valuation?
A.
$25 Million
B.
$20 Million
C.
$28.33 Million

A potential investor is seeking to invest $500,000 in a venture, which currently has 1,000,000 million shares held by its founders, and is targeting a 50% return five years from now. The venture is expected to produce half a million dollars in income per year at year 5. It is known that a similar venture recently produced $1,000,000 in income and sold shares to the public for $10,000,000.
What is the percent ownership of our venture that must be sold in order to provide the venture investor’s target return?
A. 33.33%
B. 75.94%
C. 12.76%
D. 15%

15
The process involving
minimizing the need for financial capital and finding unique
sources for financing a new venture is referred to as:
A.
mezzanine financing
B.
financial boot

Which of the following is correct?
Group of answer choices
The capital outlay normally occurs in the beginning of the investment, resulting an increase in cash flows.
If there is an increase in net working capital, a firm’s cash flow will be reduced.
Net working capital is current liabilities – current assets.
The increase in net working capital due to the investment will be recovered at the end of the investment, resulting an increase in cash flow.

You have estimated the following cash flows on a project:
Year Cash Flow to Equity (4)
0 -5,000,000
1 4,000,000
2 4,000,000
3 -3,000,000
Plot the NPV profile for this project. What is the IRR?
If the

You want to invest in United stated income fund. Provide 10
fixed income fund in United stated.
Answer Example: 1. Vanguard Inflation-Protected Securities
(VIPSX)
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.