According to my analysis of the Accessline’s proposed term sheet, I do not believe that Apex would serve its own interests, or those of its investing partners, by investing in Accessline according to the terms proposed. By investing at the proposed valuation, according to the proposed control and incentive structure, Apex would be shouldering a disproportionate share of the risk should Accessline fail to meet its performance targets, or require fresh inflows of capital from future investment rounds. Nor can Accessline take the sort of steps necessary to protect its investment in the case of management failure.

Should Apex make a counter-offer, I would suggest the following terms:

Valuation:

Accessline’s projected revenues in 1999 are $208m. Using the average price/revenue ratio of 3com and Boston Technologies, it seems reasonable to expect an IPO valuation at 3.67 times revenues, producing gross proceeds of $764m with a present value of $116m (using our 60% discount rate). Assuming that Accessline meets this revenue target, and that no future funding is required, Apex will take a slight loss on its required rate of return, barring the voluntary distribution of the dividend from the board of directors, on which we are not offered a seat. The present price per share at such an exit would be approximately $7.84.

However, given Accessline’s historical burn rate, it seems unreasonable to expect the $16m investment produced in Series B to last Accessline until 1999. Assuming Accessline will need another $32m to reach its revenue targets by 1999, Apex takes a much more severe loss relative to its required rate of return. The present price per share at such an exit, assuming the new shares are also offered at $8 per share, would be $6.18 per share.

I therefore suggest using $6 per share as a point for a new valuation of the company, assuming the inclusion/revision of terms as described below....

...6 and thereafter). If TecOne investors want a 40 percent rate of return on their investment, calculate the venture’s presentvalue.
B. Now assume that the Year 6 cash flows are forecasted to be $900,000 in the stepping stone year and are expected to grow at an 8 percent compound annual rate thereafter. Assuming that the investors still want a 40 percent rate of return on their investment, calculate the venture’spresentvalue.
C. Now extend Part B one step further. Assume that the required rate of return on the investment will drop from 40 percent to 20 percent beginning in Year 6 to reflect a drop in operating or business risk. Calculate the venture’s presentvalue.
2. Assume the forecasted cash flows presented in Problem 1 for the TecOne Corporation venture also hold for the LowTec venture. However, investors in LowTec have an expected rate of return of 30 percent on their investment until Year 6 when the rate of return is expected to drop to 18 percent. The perpetuity growth rate for cash flows after Year 6 is expected to be 7 percent.
A. Determine the presentvalue for the LowTec venture.
B. If an outside investor offers to invest $1,500,000 dollars today, what percentage ownership in LowTec should be given to the new investor?
3. Ben Toucan, owner...

...Introduction:
ApexInvestmentPartners was founded in 1987 by James A. Johnson and the First Analysis Corporation. In its eight-year life, the VC had raised three funds. The two first which are already closed had, together, a committed capital of around $70M. There were mainly concentrated in four areas: • • • • Telecommunication, information technology and software. Environmental and industrial productivity-related technologies. Consumer products and specialty retail. Health-care and related technologies.
Usually, Apex sought to be the leading investor whatever the stage in order to have one of its representatives join the board of the financed companies. Furthermore, Apex pursues to balance its investments between start-up and already generating positive cash flows investments. Now (April 1995) in the process of raising its third fund of $75M committed capital target, the VC fund seeks for new opportunities on the market. In this context, they recently approached a firm which seems to have huge potential for rapid growth: AccessLine Technologies. Based in Washington, AccessLine is an emerging telecommunication company that developed a high differentiation service called “One Person, One Number”. Basically, the concept is to assign one single number (an AccessLine number) which allows an individual to manage all of their different telecommunications. Realizing that it was...

...Finance for managers
Chapter 7— NetPresentValue and Other Investment
Question 1 : List the methods that a firm can use to evaluate a potential investment.
There are discounted and non-discounted cash-flow capital budgeting criteria to evaluate proposed investments. They are
1) Netpresentvalue: NPV is a discounted cash flow technique, which is the difference between an investment’s market value and its cost.
NPV = Presentvalue of cash inflow- Presentvalue of cash outflow
The investment should be accepted if the netpresentvalue is positive and rejected if it is negative.
2) Profitability index: PI is a discounted cash flow technique in which presentvalue of an investment’s future cash inflows divided by its initial cash outflow. It is also called benefit/cost ratio.
PI = PV of cash inflows / PV of cash outflows
If PI is positive, it will be accepted otherwise reject.
3) Internal rate of return: IRR is the discount rate that equates the presentvalues of cash inflows with the initial investment associated with the project thereby causing NPV = 0
If IRR ≥ required rate of return the project is...

...these two currencies is 1 euro =1.3118 dollars so in order to make easier the case we will use 1.31 to round it up.
The politics of the Group related to the management of the risk of change foresee, as a rule, the coverage of the future commercial flows that you/they will have bookkeeping demonstration within 12 months and of the orders acquired (or committed in progress) to put aside from their expiration. It is reasonable to believe that the relative effect of coverage suspended in the Reserve of cash flow hedge will primarily be in relief to economic account in the following exercise.
The Group is exposed to consequential risks by the variation of the rates of change, that you/they can influence on its economic result and on the value of the clean patrimony. Particularly:
Whereas the societies of the Group sustain costs denominated in different currencies by those of denomination of the respective proceeds, the variation of the rates of change can influence the Result operational of such societies. In 2012, the general amount of the commercial flows directly statements to the risk of change you/he/she has been equivalent to 10% around of the billing. Gives the last budget of Fiat the total billing of 83 billion of euro therefore the figure that we will go to analyze is equal to 830 million of Euro.
CASE STUDY
The Group, which operates in numerous markets worldwide, is naturally exposed to market risks stemming from fluctuations in currency and...

...Examples Of NetPresentValue (NPV), ROI and
Payback Analysis
Introduction
Terms and Definitions
NetPresentValue - Method of calculating the expected net monetary gain or loss from a project by discounting all expected future cash inflows and outflows to the present point in time.
Discount Rate - Also known as the hurdle rate or required rate of return, is the rate that a project must achieve in order to be accepted rather than rejected.
Return on Investment – Expected income divided by the amount originally invested
Payback Analysis – The number of years needed to recover the initial cash outlay.
Formulas
NetPresentValue = (t=1..n A * (1+r)-t OR (t=1..n A/ (1+r)t
Where A = Cash flow
r = Required rate of return
t = year of cash flow
n = the nth year
Return On Investment = (Discounted Benefits – Discounted Costs) / Discounted Costs
Payback Period = Years taken to repay initial outlay .
Eg. Project Z Outlay = $ 4000
Yearly cash...

...one investment does bad the second investment will make up for the loss and it works because stocks do not move exactly together.
C) Which of the following statements about systematic risk is false?
1) The systematic risk of a project or firm is the risk due to factors that affect the stock market as a whole.
2) The systematic risk of a single stock is a measure of the covariance between the changes in the return on the stock and the risk free rate of return.
3) The systematic risk of a stock may be used to determine the rate of return that would be required if a diversified investor were to invest in the stock.
4) The systematic risk of a portfolio composed of many different stocks can be reduced by diversifying into stocks which are negatively correlated with the other stocks in the portfolio.
Explanation: Systematic risk cannot be reduced regardless of how much a portfolio is diversified. Even if the stocks are negatively correlated some risk still exists.
D) Which of the following statements correctly describes the investment decisions of risk averse investors?
1) Investors choose stock portfolios that have zero systematic risk.
2) Investors choose stock portfolios that have zero unsystematic risk.
3) Investors choose stock portfolios with the greatest expected return.
4) Investors choose stock portfolios with the lowest expected return.
Explanation: A risk averse investor will always choose to invest...

...accounting concepts
a) Business entity
b) Money measurement
c) Continuity
d) Cost
e) Accrual
f) Conservatism
g) Materiality
h) Consistency
i) Periodicity
Solution: FUNDAMENTAL CONCEPTS OF ACCOUNTING
Accounting is the language of business and it is used to communicate financial information. In order for that information to make sense, accounting is based on 12 fundamental concepts. These fundamental concepts then form the basis for all of the Generally Accepted Accounting Principles (GAAP). By using these concepts as the foundation, readers of financial statements and other accounting information do not need to make assumptions about what the numbers mean.
For instance, the difference between reading that a truck has a value of $9000 on the balance sheet and understanding what that $9000 represents is huge. Can you turn around and sell the truck for $9000? If you had to buy the truck today, would you pay $9000? Or, perhaps the original purchase price of the truck was $9000. All of these assumptions lead to very different evaluations of the worth of that asset and how it contributes to the company’s financial situation.
For this reason it is imperative to know and understand the eleven key concepts.
a)Business equitity:
When starting or expanding a business, many owners wonder if they should form a business entity and, if so, which one they should use. There is a wide variety of information and "pitches" being made on the...

...Netpresentvalue
In finance, the netpresentvalue (NPV) or netpresent worth (NPW) of a time series of cash flows, both incoming and outgoing, is defined as the sum of the presentvalues (PVs) of the individual cash flows. In case when all future cash flows are incoming (such as coupons and principal of a bond) and the only outflow of cash is the purchase price, the NPV is simply the PV of future cash flows minus the purchase price (which is its own PV). NPV is a central tool in discounted cash flow (DCF) analysis, and is a standard method for using the time value of money to appraise long-term projects. Used for capital budgeting, and widely throughout economics, finance, and accounting, it measures the excess or shortfall of cash flows, in presentvalue terms, once financing charges are met.
The NPV of a sequence of cash flows takes as input the cash flows and a discount rate or discount curve and outputting a price; the converse process in DCF analysis, taking as input a sequence of cash flows and a price and inferring as output a discount rate (the discount rate which would yield the given price as NPV) is called the yield, and is more widely used in bond trading.
Formula
Each cash inflow/outflow is discounted back to its presentvalue (PV). Then they are...

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