Question

XYZ Inc. is seeking an investment of $64,000 from your venture capital firm. After extensive economic analysis, you estimate that the exit value of the company will be $307,000 4 years from now. Because of the risk, you will only invest if you can generate of return of 14% per year on your investment. The founders want to have 100,000 shares of the company. What is the post-money valuation of the company

Answer 1

$181,768.65

Step-by-step explanation:

Post-money valuation = Exit value / (1 + Required return)^years

Post-money valuation = $307,000 / (1+14%)^4

Post-money valuation = $307,000 / (1.14)^4

Post-money valuation = $307,000 / 1.68896016

Post-money valuation = $181768.6451526482

Post-money valuation = $181,768.65

So, the post-money valuation of the company is $181,768.65.