You have purchased 1 million shares in a restaurant chain venture. At this zero-stage investment, your company’s assets are \$110,000 plus the idea for your new product. Look back at your restaurant chain venture. Suppose that when you first approach your friendly VC, he decides that your shares are worth only \$1.00 each. a. How many shares will you need to sell to raise the additional \$1,370,000? b. What fraction of the firm will you own after the VC investment? (Round your answer to 1 decimal place.)

Answers

Answer 1
Answer:

Answer:

(a) 1,370,000 shares

(b) 42.19%

Explanation:

Given that,

Shares in a restaurant chain venture = 1,000,000 shares

Price of each share = \$1.00

(a) To raise the additional \$1,370,000:

Shares will you need to sell:

= Additional amount ÷ Price of each share

= \$1,370,000 ÷ \$1.00

= 1,370,000 shares

(b) No. of Shares After investment:

= Shares need to sell + Shares in a restaurant chain venture

= 1,370,000 + 1,000,000

= 2,370,000 shares

Therefore, the fraction of the firm will you own after the VC investment:

= (Shares in a restaurant chain venture ÷ No. of Shares After investment) × 100

= (1,000,000 ÷ 2,370,000) × 100

= 0.4219 × 100

= 42.19%

Related Questions

Apply What You’ve Learned - Managing Credit Cards and ConsumerLoansScenario: You are 30 years old, married, have two children, and household income (take-home pay) of\$3,500 per month. Your credit and consumer debt is as follows:_______.
• Car loan, 6% interest rate, \$10,000 balance, \$295 per month
• Department store card, 28% interest rate, \$600 balance, minimum payment 5% of balance
• Discover Card, 12% interest rate, \$2,000 balance, minimum payment 2% of balance
• VISA Card, 13% interest rate, \$3,000 balance, minimum payment 2% of balance
• MasterCard 1, 14% interest rate, \$4,000 balance, minimum payment 2% of balance
• MasterCard 2, 14% interest rate, \$0 balance, minimum payment 2% of balance
• Gasoline card, 21% interest rate, \$300 balance, minimum payment 5% of balance
Assume all credit cards will assess a \$35 late fee and ongoing penalty interest of 8% above the currentrate if you miss a payment. Your recent VISA card statement came with a blank cash advance check(for up to \$10,000) with terms of 23.99% APR and a fee of 3% if you use it. Your recent MasterCard 2statement came with a balance transfer oFer (up to \$4,000) with no fee and 0% APR for 12 months,after which the normal interest rate applies. You recently found an incorrect amount charged on yourVISA card from a store you frequent often. You’d like to come up with a plan to eliminate all of yourcredit card debt.
In general, is it a good idea to make only minimum payments on your credit cards?
Yes, you can invest the money saved each month to earn interest.
No, it will cause your interest rate to go up.
No, the small payment requirement is mathematically guaranteed to keep you in debt for manyyears.
Yes, this allows you more ±exibility in your cash budget.
Assuming you have \$1,500 in your budget this month with which to pay down your credit cards, howmuch should you pay on each card?
CardInterestrateOutstandingRequired minimumRecommendedbalancepayment(%)payment(\$)debtrepaymentamount
store card
Discover Card12%2,0008%
VISA Card13%3,00010%
MasterCard 114%4,0008%
MasterCard 214%010%
Gasoline card21%30015%
Total\$9,900\$1,500

Answers

Answer:

1) In general, is it a good idea to make only minimum payments on your credit cards?

• No, the small payment requirement is mathematically guaranteed to keep you in debt for many years.

All you have to do is analyze the interest rates charged by the credit card companies and it is really difficult for any investment to match those interest rates.

2) Assuming you have \$1,500 in your budget this month with which to pay down your credit cards, how much should you pay on each card?

I would start with the cards that charge the highest interest rates. I would pay the full balance of the department store card and the gasoline card = \$600 + \$300 = \$900

Since I have \$600 left, I would then pay the minimum payments for the cards that charge the least interest rates. I would pay \$40 to Discover card and \$60 to VISA.

The remaining \$500 would be used to pay MasterCard 1 card and lower its balance.

Final answer:

It's not best practice to only make minimum payments on credit cards, as it results in long-term debt due to the compounding of interest. Prioritize your \$1,500 payment towards cards with higher interest rates first and consider using the balance transfer offer on MasterCard 2 judiciously.

Explanation:

This question pertains to managing credit cards and consumer loans. In this specific scenario, it's generally not a good idea to only make minimum payments on credit cards. Only making minimum payments could keep you in debt for many years due to the compounding effect of interest.

To prioritize debt repayment with an available budget of \$1,500 to pay down on credit cards this month, you should start by paying off the credit card with the highest interest rate first. This strategy is known as the avalanche method. So, you would begin with the Department store card (28% interest rate) and gasoline card (21% interest rate), and then move on to MasterCard 1 (14% interest rate), VISA card (13% interest rate), and Discover Card (12% interest rate).

The balance transfer offer from MasterCard 2 could be beneficial. As it offers a 0% APR for 12 months, you could transfer some of the balance from the cards with high interest rates to MasterCard 2. However, this should only be done if you are confident that you can pay off the transferred balance within the promotional period of 12 months, as otherwise, interest would revert to the regular rate.

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A company's fixed costs are \$1,500,000, the unit selling price is \$250, and the unit variable costs are \$130. The amount of sales required to realize an operating income of \$200,000 is Group of answer choices

Answers

Answer:

The answer is 14,167 units

Explanation:

Target sales is the amount of sales a company has projected itself to sell within a particular period.

Target sales(in units) =

(Fixed cost + target income) / contribution margin

Where contribution margin is sales in unit minus variable costs

(\$1,500,000 + \$200,000) / \$250 - \$130

\$1,700,000/\$120

=14,167 units

Therefore, 14,167 units is the amount of sales that will need to be recorded to generate an operating income of \$200,000

On December 31, 2019, Spearmint, Inc., issued \$450,000 of 9 percent, 3-year bonds for cash of \$461,795. Prepare the necessary journal entry for Spearmint, Inc.

Answers

Answer:

Dr Cash for \$461,795,

Cr Premium on Bonds Payable for \$11,795

Cr Bonds Payable for \$450,000

Explanation:

Journal entries

Dr Cash for \$461,795,

Cr Premium on Bonds Payable for \$11,795

Cr Bonds Payable for \$450,000

(Issue price of \$461,795 - par value of \$450,000) =\$11,795

Answer:

Dr Cash         \$461,795

Cr Bonds payable                    \$450,000

Cr Premium on bonds payable \$11,795

Explanation:

The journal entries to record the issue of bonds for the proceeds of \$461.795 is to debit the cash amount as the cash has increased and credit would \$450,000 in bonds payable account and the balance of \$11,795(\$461,795-\$450,000) is the premium on the issue and it is credited to premium on bonds account.

The bonds payable is credited because the \$450,000 represents obligation owed to bondholders

Which of the following is a disadvantage of government provision of a public good? A. The private sector can provide all public goods at a lower cost. B. The government does not provide enough of any public good. C. The government lacks information about what people are willing to pay for the good. D. None of the above is a disadvantage.

Answers

Answer: Option (C) is correct.

Explanation:

Correct option: The government lacks information about what people are willing to pay for the good.

The government have less information about the willingness to pay of the consumers. So, this creates an obstacle for the government for a efficient provision of a public good.

So, the government have no clue about the minimum that a consumer can pay, this will lead to create problem for the government.

Government don't know to whom these public goods are to be provided.

Final answer:

A potential disadvantage of the government provision of public goods is that the government may lack clear information about what people are willing to pay for the good (C), which could lead to inefficiencies. This does not mean that private provision is always more efficient, especially in the case of essential public goods.

Explanation:

In response to your question about the disadvantage of government provision of a public good, option C indicates a potentially valid issue. This option suggests that government lacks information about what people are willing to pay for the good. Specifically, in some cases, private firms may provide services more efficiently than government because they have more capability to gauge market demand and adjust prices accordingly. However, for certain public goods like fire and police services, private provision might not be efficient or advantageous due to the nature of these services.

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The following data apply to Hill's Hiking Equipment: Value of operations \$20,000, Short-term investments \$1,000, Debt \$6,000, Number of shares 300; The company plans on distributing \$50 million by repurchasing stock. What will the intrinsic per share stock price be immediately after the repurchase?

Answers

Answer:

\$50

Explanation:

Solution

Recall that:

The company plans on giving out \$50 million by repurchasing stock hence, number of stock to be purchased = 50/50 = 1 million

The Number of share bought back = 300-1 = 299

Thus

\$20,000 + \$1,000 - \$6000 = \$15,000

\$15,000 / 300 shares = \$50

Before Repurchase  After the repurchase

Value of operations    20000                          20000

Short-term investments    1000                        950

Less : Debt                    6000                           6000

Intrinsic value of equity    15000                      14950

Number  of shares           300                           299

Intrinsic value per share    50                           50

Therefore the intrinsic per share stock price be immediately after the repurchase is \$50

The value of a listed call option on a stock is lower when: I. The exercise price is higher. II. The contract approaches maturity. III. The stock decreases in value. IV. A stock split occurs.

Answers

A call bond option is termed as the option that implies the bondholder the right to purchase the bonds at the prevailing price in the market. A buyer of a bond call option in the secondary market forecasts a drop in investment substantial rise in bond prices.

The correct option is a. I, II, and III only

Option a. I, II, and III only is correct because The contract value will decline as it reaches maturation because it will become less unpredictable.

The goal of purchasing a call option is to benefit if the price of the underlying stock rises. The attractiveness of the callable bond falls as the price of bitcoin declines, and the worth of the call option reduces as well.

The exercise price is the price where the individual who acquires a call option will be able to acquire the underlying shares. If this price is too high, the benefit from buying the stock at maturity will be too little, diminishing the value of the specified call option.

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Answer: a. I, II, and III only

Explanation:

The exercise price refers to the amount that the person who buys the call option will get to buy the underlying stock at. If this price is high, the profit from buying the stock at maturity will be less so the value of the listed call option reduces.

As the contract approaches maturity, the value will decrease because it will be less volatile as it approaches maturity.

The purpose of buying a call option is so that a profit can be made if the underlying stock increases in value. If the stock decreases in value, the allure of the call option decreases so therefore will the value.