Accountancy
helion venture is a venture capital firm that is interested in investing in mayur soft Pvt ltd Mr Ramesh started Mayur software about a year back with a focus on developing software products for the banking and financial services market. at that time Mr Ramesh invested rsb10,00,000 of his savings to kick start the venture and he was issued 100,000 shares of common stock. after conducting a due diligence exercise. helion has decided to invest rs 5.0 croree in mayur software. Mr Ramesh estimates that the venture will not make profit until year 5 when he expects the net income.to be rs 10 crores. the common stock of finacle software, a comparable banking and financial services software firm is currently trading on nse at rs 20 per share l. finacle software net income for the most recent financial year was rs 120 lakhs and the firm has 400,000 shares of the common outstanding.
compute the value of Mayur software at the end of year 5 using VC method. assuming helion requires a 35% compound annual rate of return on similar investments, compute the present value of Mayur software.
compute the percentage of ownership in Mayur software that Mr Ramesh will need to giv up to helion for the 5.0 crores investment.
compute the number of shares that will need to be issued to helion.
also calculate the issue pric (for the new investment) and the pre-money and post-money valuation of Mayur software
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