Answer:
price = $4335382.48
so invest made as 5m share value more as amount paid
Explanation:
given data
exit value = $1 B
discount rate r = 50 % = 0.5
time t = 10 year
current stock outstanding = 20 M
common stock = 5 M
investment = $4 M
solution
we get here today value that is express as
total value = [tex]\frac{exit\ value}{(1+r)^t}[/tex] .....................1
put here value and we get
total value = [tex]\frac{1000000000}{(1+0.5)^{10}}[/tex]
total value = $17341529.92
now we get price per share that is
price per share = [tex]\frac{total\ value}{no\ of\ share}[/tex]
price per share = [tex]\frac{17241529.92}{20000000}[/tex]
price per share = 0.86707649
so price for 5 M share is
price = 0.86707649 × 5 M
price = $4335382.48
