Venture Capital and the Finance of Innovation [Course number]. Chapter 16 Participating Convertible Preferred Stock. Professor [Name ] [School Name]. Binary Options. Binary Option Pricing formulas. Plain Binary Option. Random-Expiration Binary Option. Example 1.
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Venture Capital and the Finance of Innovation[Course number]
Participating Convertible Preferred Stock
Professor [Name ]
Plain Binary Option
Random-Expiration Binary Option
Suppose that EBV offers the employees of Newco a bonus pool of $5M upon any exit where firm value exceeds $200M. Currently, the firm value of Newco is $40M, and base-case option pricing assumptions (Series A) apply.
What is the current value of this bonus incentive?
1) What is the exit diagram for the Series A?
2) What is the breakeven valuation?
XYZ ventures is considering a $20M Series F in Newco for 10M shares of PCP with a QPO threshold of $6 per share.