I had a blackout on my 1st round phone interview with qatalyst.
Also, where can I learn more about VC valuations (e.g. LBO equivalent of VC)? I have a 2nd round at FT Partners.
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Assuming a tax rate of 40%, would the answer be 8.33%?
Calculation 1/((1-0.4)*x)=0.20, x=8.33?
WSO, let me know if I made a mistake
Assuming 100% debt
Second that.
The earnings yield of your target is 5%, so x * (1 - 40%) = 5%. x = 8.33%
Equities/Debt mix doesn't have to be given out necessarily, as the cost from issuing equity would be 1/0.1 = 10%, and debt with cost threshold of 8.33% could technically offset the difference with a corresponding mix.
..
you can't. You need to know the debt/equity mix
and if you know the ratios? How would you answer?
Can you share how you would answer the question for the following situations:
100% equity 75/25 equity 75/25 debt
Is this for Summer Analyst positions?
Yes
.
Worked at a top vc this summer. Most valuations were comps, really. Project out financials for the future 5 years then use comps. But valuation wasn't a huge part of my job - most of my time was spent on powerpoint.
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