©2000, Entrepreneurial Finance, Smith and Kiholm Smith Chapter 13
{"Image DocumentName": "\u00a92000, Entrepreneurial Finance, Smith and Kiholm Smith Chapter 13", "Image ImageDescription": "Figure Objective. Valuation is based on reducing the equity the outside investor receives to be more consistent with required return. Does the change in allocation result in positive NPV for the entrepreneur? Assumptions. The venture requires a total investment of  2.5 million (of which  500 thousand is human capital). A diversified investor provides  1.2 million, the entrepreneur provides the balance. No free cash flow until the fifth year, which is a liquidity event. There are two equally likely discrete scenarios (Success and Failure) Total wealth of the entrepreneur is  2.0 million. Wealth not invested in the venture is invested in the market. The investor s claim is reduced to a  100 thousand NPV. No information or incentive effects. \u00a92000, Entrepreneurial Finance, Smith and Kiholm Smith. Chapter 13.", "Image XResolution": "37", "Image YResolution": "37", "Image ResolutionUnit": "Pixels/Centimeter", "Image Software": "SlidePlayer", "Image YCbCrPositioning": "Centered"}