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

Onsider the following subscription behavior information from genie, a web site that provides tools for constructing a family tree (ancestor search). subscriptions cost $9.99 per month, but you are charged for the entire year at the time of purchase. there is a one-year minimum term when you sign up for the service. once purchased, subscriptions are set to renew automatically unless the subscriber cancels them. when a membership renews, it renews for a one-year term and again you are charged for the entire year. there are no variable costs associated with providing this service to an individual customer, but genie does engage in customer relationship activities that they believe will increase customer retention. these customer relationship activities cost genie about $10 per year per customer. based on a sample of 1000 customers that joined genie five years ago, near the time when the company was founded, they were able to determine how many of those customers remained subscribers in the second year, third year etc. based on this information, genie calculated the average annual retention rate to be 20%. genie uses an annual discount rate of 8%. a. last year, genie spent $10,000 placing advertisements on google. genie management believes that these advertisements were responsible for about 300 new subscribers. would you recommend to genie management that they purchase more google ads? b. suppose a newly-introduced loyalty program increases the number of customers that remained to 30%. does this new data change your answer to 9.a? c. do you have any hesitations or concerns about making recommendations to management based on your above estimate of customer lifetime value?

Security a has a higher standard deviation of returns than security b. we would expect that: (i) security a would have a risk premium equal to security b. (ii) the likely range of returns for security a in any given year would be higher than the likely range of returns for security b. (iii) the sharpe ratio of a will be higher than the sharpe ratio of b. (a) i only (b) i and ii only (c) ii and iii only (d) i, ii and iii

During 2016, nike inc., reported net income of $3,760 million. the company declared dividends of $1,022 million. the closing entry for dividends would include which of the following? select one: a. credit cash for $1,022 million b. credit dividends for $1,022 million c. debit net income for $1,022 million d. credit retained earnings for $1,022 million e. debit dividends for $1,022 million