Question 1: John and Samantha continue to converse, and Samantha…

Question Question 1: John and Samantha continue to converse, and Samantha… Question 1:John and Samantha continue to converse, and Samantha proposes a new term sheet. Samanthastill wants to have a 50% rate of return on her $5 million investment and is offering to buystandard preferred shares4. Thompson conservatively projects net income of $21 million in yearfive (five years from now) and knows that comparable companies trade at a price to earningsratio of 36. There is only one round of investment. There are 1,000,000 shares outstandinginitially. a. What percentage of the company would Samantha need to own in Year 05?b. How many shares should she purchase?c. At what price?In a later counteroffer, Samantha proposes that instead of a standard preferred she be allowed touse standard preferred and that her shares be augmented with a pay-in-kind dividend (a stockdividend in addition to her preferred stock cash dividend) equal to 10% of her initial investmentevery year6. In addition to cash, Samantha will receive shares. So, she would get the samenumber of shares initially, but they would behave differently than the PP shares.d. What is Samantha’s internal rate of return on this transaction if she takes the samenumber of shares as part A, but now including the share dividend too.e. If Samantha purchases the same number of shares for this deal as the deal with thepreferred cash dividend (Question 4b), what price per share does she pay? Question 2:Below is the tear-sheet and Venture Source information for an acquisition out of South Florida in2000. Qtera was bought for $3 billion a mere 14 months after the initial round of venture capital.a. If you assume that the venture capital investors in Rounds 1 & 2 bought standard preferred shares(you can figure the price based on the investment and the post-money valuation), how muchmoney did the founders take home? Assume 10% simple interest on any debt.  Image transcription textTHOMSON REUTERS M&A Tearsheet Deal Synopsis and Purpose Nortel Networks Corp to acquireQtera Corp for 3,250.0 million 12/15/1999 US – Nortel Networks Corp acquired Qtera Corp, a manufacturer offiber optic telecommunications equipment, for $3.25 bil The consideration consisted of $2. 75 bil i… Show more… Show more  Business Entrepreneurship GEB 5114 Share QuestionEmailCopy link Comments (0)