Using the following information, please answer the questions about Surelock Homes, a start-up...

Question

Using the following information, please answer the questions about Sure lock Homes, a
start-up company. In your analysis, assume the valuation date is the end of year 6,
projected earnings in year 6 will be$12 million, and an appropriate price-to-earnings ratio
for valuing these earnings is 20 times.

In addition, the company wants to reserve 15 percent of the shares outstanding at time 6
for employee bonuses and options.
a) What percentage ownership at time 0 should round 1 investors demand for their $6
million investment?
) If Sure lock presently has 1 million shares outstanding, how many shares should...

David · Accepted Answer

Using the following information, please answer the questions about Sure lock Homes, a 
start-up company. In your analysis, assume the valuation date is the end of year 6, 
projected earnings in year 6 will be$12 million, and an appropriate price-to-earnings ratio 
for valuing these earnings is 20 times.
 
 
In addition, the company wants to reserve 15 percent of the shares outstanding at time 6 
for employee bonuses and options. 
a) What percentage ownership at time 0 should round 1 investors demand for their $6 
million investment? 
b) If Sure lock presently has 1 million shares outstanding,

Using the following information, please answer the questions about Surelock Homes, a start-up company. In your analysis, assume the valuation date is the end of year 6, projected earnings in year 6...

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