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Exam Cases in Corporate Finance 2018 (Master TEW UGent)
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Exam 2020: questions and answers Cases in Corporate Finance 2020 (Prof. Rudy Aernoudt) Master TEW - Corporate Finance
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lOMoARcPSD|4959290Stuvia - Koop en Verkoop de Beste Samenvattingen
Exam cases in corporate finance – prof R. Aernoudt – 24/5/2018
Student: Name: Aernoudt… First name…Rudy … Student n° …1… prof……
Result: 20/20 (score ventilation: 5 for 3 reasons/5 fro explication prop 1/5 for prop
2/5 ongoing evaluation)
Take case Watchyou (book p. 215 (P&L) – 217 (Financing plan)– basic scenario)
The fine-tuning of the business plan revealed that the financial needs for the first 6
months are 55 K; second 6 months of yr 1: 80 K and yr 2: 15 K. Therefore the
financing rounds have been adapted. There are 2 new proposals are on the table:
Proposal 1:
- Crowdlending (not equity): 20 K @ 5% interest rate – payback after 8 yrs
- BA1: 35 K desired return 35%
- VC1: 80 K and wants therefore a share of 31,5%
Proposal 2:
- BA1: 15 K desired return 40%
- Mezzanine: 40 K, interest 25% (non convertible)
- BA2: 80 K, desired return 30%.
Question: which proposal do you - as founder - prefer: give three reasons.
My preference goes to proposal 1 for following reasons: (5/5)
1. Better financial structure and hence easy access to bank finance (eg to finance
yr 3) and less liquidity constraints (as no mezzanine)
2. Residual method based value of idea is higher (after 2nd FR); despite lower
share
3. Cost of lending is lower (crowd 5% versus mezzanine 25%) and even the cost
of equity is lower (BA1 35%; VC1: 30% against proposal 2 BA1 40%, VC1: 30%)-
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PS: other arguments making sense can of course be accepted as well!
For prof. only.
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