Homework Help is Here – Start Your Trial Now!
Business
Accounting
Pinnacle Venture, PE investor is considering investing $4000 million in the  equity of Best Systems, a start-up IT company. Pinnacle ventures required rate of  return from this investment is 40% and it’s planned holding period is 5  years. Best Systems has projected an EBITDA of $5000 million for year 5. An  EBITDA multiple of 6 for year 5 is considered

Pinnacle Venture, PE investor is considering investing $4000 million in the  equity of Best Systems, a start-up IT company. Pinnacle ventures required rate of  return from this investment is 40% and it’s planned holding period is 5  years. Best Systems has projected an EBITDA of $5000 million for year 5. An  EBITDA multiple of 6 for year 5 is considered

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

Pinnacle Venture, PE investor is considering investing $4000 million in the 
equity of Best Systems, a start-up IT company. Pinnacle ventures required rate of 
return from this investment is 40% and it’s planned holding period is 5 
years. Best Systems has projected an EBITDA of $5000 million for year 5. An 
EBITDA multiple of 6 for year 5 is considered reasonable. At the end of year 5, 
Best Systems is likely to have a debt of $2000 million and a cash balance of 
$600 million.
i. What ownership share in Best Systems should Pinnacle Venture ask for?
ii. What is the post-money investment value of Best Systems equity?
iii. What is the pre-money investment value of Best Systems?

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS