Simple Math calculation
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Description
Experience Level: Entry
Create an excel overview of two investment strategies to find out which option is the more profitable option in comparison to different growth rates:
Option 1:
Investment: $1 million
Company valuation: $60,000,000
Equity split: 80/20 upon converting the convertible notes
Received shares value: $800,000 (after equity split)
Discount: 35% off the current valuation is received after conversion
Option 2:
Investment: $1 million
Received shares: 100% of the $1 million investment in shares
Company valuation: $60,000,000
Discount: 35% off the current valuation
One-time setup fee: 1%
Annual management fee: 0.7%
Exit performance fee: 10% of the profit if the annual return is below 25%. If the annual return exceeds 25%, the performance fee is 15%.
So show for both options with a sensitivity analysis how the return/performance effects the final return when taking the performance fees into account vs. option 1 that does not have any fees. Investment time frame is around 1-10 years.
Option 1:
Investment: $1 million
Company valuation: $60,000,000
Equity split: 80/20 upon converting the convertible notes
Received shares value: $800,000 (after equity split)
Discount: 35% off the current valuation is received after conversion
Option 2:
Investment: $1 million
Received shares: 100% of the $1 million investment in shares
Company valuation: $60,000,000
Discount: 35% off the current valuation
One-time setup fee: 1%
Annual management fee: 0.7%
Exit performance fee: 10% of the profit if the annual return is below 25%. If the annual return exceeds 25%, the performance fee is 15%.
So show for both options with a sensitivity analysis how the return/performance effects the final return when taking the performance fees into account vs. option 1 that does not have any fees. Investment time frame is around 1-10 years.
Philip V.
100% (14)Projects Completed
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United Kingdom
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