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Business, 25.03.2021 16:40 johnisawesome999

The entrepreneurs who created MocsTech Corporation are interested in the valuation of their company. They have forecasted annual cash flows for the next five years: Year Cash Flow 1 -$100,000 2 -$15,000 3 $500,000 4 $750,000 5 $1,000,000 The forecasted profits for years 1 and 2 are negative because the venture will not be profitable until year 3. Assume that MocsTech's Year 6 cash flows are forecasted to be $1,500,000 and are expected to grow at a 10 percent rate thereafter. Assume that investors will initially want a 30% rate of return on their investment but that this rate of return will drop to 15% beginning in Year 6 (when the venture will be considered a mature company). Note: make sure to look at the practice problems for tips. Set up the equation that you would calculate to determine the venture's valuation (present value). You do not need to calculate the final valuation (unless you want to) -- you just need to set up the equation. Let's say that the company was valued at $5,000,000. If an investor wanted to invest $2,000,000 in the company, how much equity would he/she receive in exchange for the investment

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