BUS 605 Seed Funding

For your business venture, evaluate the possibility of seed funding from venture capital funding, angel funding, SBA funding or other business alliances. Which source of seed financing would you prefer for your business venture and why? Are there any disadvantages to seed money?

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Trinidad TremblayLv2

27 Mar 2019

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Use the time-value-of-money principles to evaluate a personal capital investment such as going to graduate school, funding a retirement account, purchasing a home, or other possible decision. Discuss how you approached the issues, how you used the time-value-of-money principles, and any insights that you gained from the analysis.

Project Alpha -- capital required: $1,250,000, March 1, next year ï·

Project Beta â capital required: $240,000 per month, Dec. this year through and including the next two years ï·

Pension funding through the next three calendar years, including this year (our underwriters advise that an annual funding of $4,500,000, due at the end of December, will be needed for this year, with increases thereafter of 7% per annum) ï·

Purchase of a Tesla Roadster for the Chairman of the Board (for his birthday next April) at $101,500. ï· Management retention bonuses for this year and next year, each payable, as usual, in March of the following year, not to exceed $10 million per year. These are all special projects, requiring funding from sources other than operating revenues. I will handle scheduling the appropriate deposits into the Special Capital account at Penultimate National Bank and, except as specified below, you are not to concern yourselves with where funding may be obtained, only with how much will be needed. Also, sinking fund requirements for the Series of 2025 Subordinated Debentures will be funded from the Special Capital account in single payments at the end of next year and the year after, only (that is, no more than two years of sinking fund payments need be funded â disregard any payments for this year and future payments beyond the two-year period). The indenture requires redemption of 2% of the $600 million issue per year. Retirement of the balance of the bonds will be funded elsewhere. At the last meeting, the Board accepted the offer of Western Widgets for purchase of our widget winding facility in West Winona which will produce net proceeds in the amount of $16,500,000. This sale will be completed this month, and on the first of next month I will be depositing those funds in the Penultimate National Bank Special Capital account at 2.5% to provide at least a start on funding these projects. (This same 2.5% rate should be used for all discounting computations without regard to the companyâs cost of capital). In addition, it is possible, but not certain, that the Wilmer Widget Wrapping plant may also be sold for as much as $20 million (net) in June of next year. Since this is not certain, it should be treated as an alternative partial solution to the cash needs problem.

***Create your estimate of the monthly deposits required to meet the above expenses, assuming the sale of the West Winona facility, with an explanation for the Board as to how you came up with that figure.

olivemink746

Project Alpha -- capital required: $1,250,000, March 1, next year ï·

Project Beta â capital required: $240,000 per month, Dec. this year through and including the next two years ï·

Purchase of a Tesla Roadster for the Chairman of the Board (for his birthday next April) at $101,500. ï·

Management retention bonuses for this year and next year, each payable, as usual, in March of the following year, not to exceed $10 million per year. These are all special projects, requiring funding from sources other than operating revenues. I will handle scheduling the appropriate deposits into the Special Capital account at Penultimate National Bank and, except as specified below, you are not to concern yourselves with where funding may be obtained, only with how much will be needed. Also, sinking fund requirements for the Series of 2025 Subordinated Debentures will be funded from the Special Capital account in single payments at the end of next year and the year after, only (that is, no more than two years of sinking fund payments need be funded â disregard any payments for this year and future payments beyond the two-year period). The indenture requires redemption of 2% of the $600 million issue per year. Retirement of the balance of the bonds will be funded elsewhere. At the last meeting, the Board accepted the offer of Western Widgets for purchase of our widget winding facility in West Winona which will produce net proceeds in the amount of $16,500,000. This sale will be completed this month, and on the first of next month I will be depositing those funds in the Penultimate National Bank Special Capital account at 2.5% to provide at least a start on funding these projects. (This same 2.5% rate should be used for all discounting computations without regard to the companyâs cost of capital). In addition, it is possible, but not certain, that the Wilmer Widget Wrapping plant may also be sold for as much as $20 million (net) in June of next year. Since this is not certain, it should be treated as an alternative partial solution to the cash needs problem.

Please prepare the following for distribution to the Board Members. **A cash requirements budget for the above expenditures.

turquoisekangaroo682

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