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| Value given in problem | |||||||||
| Formula/Calculation/Analysis required | |||||||||
| Qualitative analysis or Short answer | |||||||||
| 2013 Investment | $ 105,000,000 |
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| 2013 Investor’s Ownership | 10% | ||||||||
| 2014 Revenue | $ 58,000,000 |
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| Revenue annual growth | 24% | ||||||||
| Price / Revenue ratio | 16 | ||||||||
| What is the estimated 2018 value of GE’s share in Pivotal? |
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| 2018 estimated revenue |
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| 2018 Value | |||||||||
| 2018 value of investor’s share |
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| What is GE’s implied cost of capital that justified $ 105 M investment? |
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| Implied Cost of Capital | |||||||||
| How will your answers change if the annual growth were only 20%? |
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| Revenue annual growth | 20% | ||||||||
| 2018 estimated revenue |
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| 2018 Value | |||||||||
| 2018 value of investor’s share |
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| Implied Cost of Capital | |||||||||
| What is the advantage of having convertible preferred instead of common equity? |
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