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PROBLEM 10-5 Given EBITDA 2009 Added EBITDA Funding need VC’s required rate Rate on convertible… 1 answer below » PROBLEM 10-5 Given EBITDA 2009 Added EBITDA Funding need VC’s required rate Rate on convertible debt Term EBITDA multiple EBITDA growth rate Solution Legend $4,000,000 1,000,000 5,800,000 25.0% 8.0% 5 years 5 20.0% = Value given in problem = Formula/Calculation/Analysis required = Qualitative analysis or Short answer required = Goal Seek or Solver cell = Crystal Ball Input = Crystal Ball Output Solution a. What is the value of the combined firm in five years? Estimated EBITDA EBITDA 2009 Estimated EBITDA 2014 Multiple 5 Enterprise Value Less: Debt $(5,800,000) Equity Value in 2014 b. What View complete question » PROBLEM 10-5 Given EBITDA 2009 Added EBITDA Funding need VC’s required rate Rate on convertible debt Term EBITDA multiple EBITDA growth rate Solution Legend $4,000,000 1,000,000 5,800,000 25.0% 8.0% 5 years 5 20.0% = Value given in problem = Formula/Calculation/Analysis required = Qualitative analysis or Short answer required = Goal Seek or Solver cell = Crystal Ball Input = Crystal Ball Output Solution a. What is the value of the combined firm in five years? Estimated EBITDA EBITDA 2009 Estimated EBITDA 2014 Multiple 5 Enterprise Value Less: Debt $(5,800,000) Equity Value in 2014 b. What share of the firm’s equity will the VC require? VC’s Cash Flows Year Cash Flows 0 (5,800,000) 1 2 3 4 5 Year 5 Conversion Value VC Rate of Return VC’s Share c. What share of the firm’s equity will the VC require? Estimated EBITDA EBITDA 2009 Estimated EBITDA 2010 Multiple 5 Enterprise Value Less: Debt $(5,800,000) Equity Value in 2014 VC’s share Solved for using Goal Seek such that the VC realizes the desired 25% return. Document Preview: CB_DATA_

Problem 10-5

Estimated EBITDA 2014

Equity Value in 2014

Equity Value in 2014

Solution Legend

= Value given in problem

= Formula/Calculation/Analysis required

= Goal Seek or Solver cell

= Crystal Ball Input

= Crystal Ball Output

= Qualitative analysis or Short answer required

PROBLEM 10-5

EBITDA 2009

EBITDA 2009

Multiple

years

VC’s required rate

Term

EBITDA growth rate

EBITDA multiple

Added EBITDA

Rate on convertible debt

Year

VC’s Cash Flows

Cash Flows

VC Rate of Return

Given

Solution

VC’s Share

c. What share of the firm’s equity will the VC require?

VC’s share

a. What is the value of the combined firm in five years?

Estimated EBITDA 2010

Enterprise Value

Less: Debt

b. What share of the firm’s equity will the VC require?

Year 5 Conversion Value

Estimated EBITDA

Funding need

$4,000,000.00

1000000.00

5800000.00

0.25

0.08

5.00

5.00

0.20

5.00

($5,800,000.00)

0.00

-5800000.00

1.00

2.00

3.00

4.00

5.00

5.00

($5,800,000.00)

Solved for using Goal Seek such that the VC realizes the desired 25% return.

CB_DATA_

Problem 10-5

Estimated EBITDA 2014

Equity Value in 2014

Equity Value in 2014

Solution Legend

= Value given in problem

= Formula/Calculation/Analysis required

= Goal Seek or Solver cell

= Crystal Ball Input

= Crystal Ball Output

= Qualitative analysis or Short answer required

PROBLEM 10-5

EBITDA 2009

EBITDA 2009

Multiple

years

VC’s required rate

Term

EBITDA growth rate

EBITDA multiple

Added EBITDA

Rate on convertible debt

Year

VC’s Cash Flows

Cash Flows

VC Rate of Return

Given

Solution

VC’s Share

c. What share of the firm’s equity will the VC require?

VC’s share

a. What is the value of the combined firm in five years?

Estimated EBITDA 2010

Enterprise Value

Less: Debt

b. What share of the firm’s equity will the VC require?

Year 5 Conversion Value

Estimated EBITDA

Funding… Attachments: Q.-Attachment….xls View less » Sep 17 2015 02:04 PM